Quotes and rates for precious metals Gold vs US Dollar (XAUUSD)

• Gold price loses ground on cautious market sentiment ahead of US Inflation data.
• The improved Greenback fades the shine of the bright metal.
• Investors seem to prefer the US Dollar instead of safe-haven Gold during geopolitical tension.

Gold price moves on a downward trajectory that began on January 7, inching lower to near $2,020 per troy ounce during the Asian session on Tuesday. The precious metal is encountering resistance as the US Dollar strengthens for the second consecutive session, supported by subdued US bond yields in anticipation of the release of US inflation data on Tuesday.

The anticipation of inflationary pressures in the United States (US) has led to expectations that the Federal Reserve (Fed) will abstain from reducing interest rates at the March meeting. This outlook is diminishing the appeal of non-yield-bearing assets like Gold. Markets are pricing in only a small 14% probability of a rate cut by the Fed in March. However, the likelihood of a rate cut at the May meeting is estimated to be around 60%.

Dallas Federal Reserve (Fed) Bank President Lorie K. Logan recently stated that there is presently no immediate need to lower interest rates. She acknowledged "significant progress" in curbing inflation but stressed the importance of obtaining additional evidence to ensure the sustainability of this progress.

The price of Gold is facing downward pressure as the US Dollar gains renewed demand amidst escalating geopolitical tensions in the Middle East. Yemen’s Houthi rebels reportedly launched missiles at a ship bound for a port in Iran, resulting in minor damage to the vessel but no injuries to its crew, according to authorities.

Israel conducted a series of airstrikes in the southern Gaza city of Rafah on Monday. Israeli Prime Minister Benjamin Netanyahu expressed his intention on Sunday to escalate military operations in Rafah after rejecting a ceasefire proposal from Hamas.

• Gold price faces some selling pressure around $2,018 in Tuesday’s early Asian session. 
• Several Fed officials emphasized last week that further evidence of progress on inflation is needed before cutting rates.
• More stimulus announcements from China might boost the gold price. 
• The US January Consumer Price Index (CPI) will be the highlight on Tuesday. 

Gold price (XAU/USD) trades in negative territory for the fifth consecutive day during the early Asian session on Tuesday. The high-for-longer rate narrative from the US Federal Reserve (Fed) exerts some selling pressure on the non-yielding yellow metal. Investors await crucial US inflation data, which could provide some insight into the next steps the Fed takes on interest rates. The gold price currently trades near $2,018, down 0.06% on the day. 

Meanwhile, the US Dollar Index (DXY), an index of the value of the USD measured against a basket of six world currencies, consolidates around 104.12. The US Treasury yields edge higher, with the 10-year yield standing at 4.17%.

Several Federal Reserve (Fed) officials emphasized last week that further evidence of progress on inflation is needed before cutting rates. The January CPI data on Tuesday will be key data, which is projected to show an increase of 0.2% MoM and 3.0% YoY. The Core CPI excludes volatile food and energy prices and is estimated to show an increase of 0.3% MoM and 3.8% YoY. Fed Funds futures have priced in 107 basis points (bps) or about 1% in rate cuts for 2024, down from 158 bps less than a month ago.

Mainland China's financial markets are closed this week for the Lunar New Year holidays. China's inflation fell by 0.8% year on year in January, the greatest decline in 15 years. This highlights the possibility of deflation in the world's second-largest economy. Nonetheless, the downside of gold might be capped due to the additional stimulus measures from Chinese authorities to boost the market. 

Gold traders will closely monitor the US January Consumer Price Index (CPI) on Tuesday. On Thursday, the US Retail Sales will be released. Traders will take cues from the data and find trading opportunities around the gold price.

Gold ended the week lower amid an uncertain outlook on rates. Economists at TD Securities analyze the yellow metal’s outlook.

Fed officials contemplate the start of a cutting cycle

• Gold price clings to the range-bound theme around $2,025 on Monday.  
• Several Fed officials agreed that the FOMC needs time to assess economic data before cutting rates. 
• The rising Middle East geopolitical tensions after Israel rejected a ceasefire offer from Hamas might lift the gold price.
• Gold traders await the US January CPI inflation data on Tuesday.

Gold price (XAU/USD) oscillates in a narrow trading range of $2,020-$2,040 during the early Asian trading hours on Monday. The significant move in gold is unlikely amid an uncertain outlook on rates. The Japanese market is closed for the National Day holiday, while Hong Kong, Singapore, and mainland China markets are closed for the Lunar New Year holiday. Gold price currently trades near $2,025, down 0.02% on the day.

The Federal Reserve (Fed) Chairman Jerome Powell said last week that while the central bank wants to see continued strong growth, a strong economy does threaten to send inflation up. Meanwhile, several Fed officials stated they want more time to see if inflation continues to subside. Minneapolis Fed President Neel Kashkari and Boston Fed President Susan Collins agreed that the FOMC has time to assess economic data before cutting rates. 

Market players will take more cues from the US January inflation data, due on Tuesday. The headline Consumer Price Index (CPI) for January is expected to slow from 3.4% in December to 3.0% in January. The inflation reports over the next few months could be key in determining the timeline for when the Fed will cut its benchmark interest rate.

Apart from this, the ongoing geopolitical tensions in the Middle East after Israel rejected a ceasefire offer from Hamas might boost traditional safe-haven assets like gold. However, the upside of yellow metal might be capped if the Chinese economy shows signs of worsening. Last week, China's consumer prices plummeted at the fastest rate in 15 years in January, highlighting the challenge for officials attempting to restore investor confidence in the world's second-largest economy.

Looking ahead, gold traders will monitor the US CPI inflation data on Tuesday. Later this week, US Retail Sales will be due on Thursday and the Producer Price Index (PPI) January will be released on Friday. Market players will take cues from the data and find trading opportunities around the gold price. 

• The XAU/USD retreated to $2,025 on Friday, registering losses of 0.40% on the day.
• Despite soft CPI revisions, the metal failed to gather traction.
• Daily chart indicators hint at a bearish bias, with RSI's negative slope and MACD's rising red bars suggesting selling momentum.
• In the four-hour chart, indicators appear flat hinting at a consolidation of losses.

In Friday's session, the XAU/USD was observed at a trading level of $2,025, marking a dip of 0.40%. Focus is set on next week’s Consumer Price Index (CPI) figures from January after the US downwardly revised the December figures, to continue placing their bets on the next Federal Reserve (Fed) decisions.

In that sense, investors are eyeing the Federal Reserve's moves, as soft CPI revisions seem to have provided a breather for officials considering rate cuts. However, strong Q1 growth predictions in the US market and rising wage pressures amidst a tight job market from the Fed indicate that rate cuts may be delayed. As for now, markets seem to have given up the odds of a cut in March and instead pushed them to May. Next week's inflation reading will be key for the timing of the easing cycle and in case, data justifies the delay of rate cuts, the yellow metal metal may see further downside

XAU/USD technical analysis

Technical indicators on the daily chart initially depict a dominance of selling pressure. The Relative Strength Index (RSI) is on a descending slope and is hovering in the negative domain, suggesting that bearish momentum is currently prevailing. Simultaneously, the Moving Average Convergence Divergence (MACD) displays growing red bars, reinforcing the strength of the selling momentum. However, the broader perspective reveals a different story. Despite the metal trading under the 20-day Simple Moving Average (SMA), it remains comfortably positioned above the 100 and 200-day SMAs. This inclination highlights the dominance of buying interest in the broader context but that the bears are steadily gaining ground in the short term.

XAU/USD daily chart

Turning attention to the four-hour chart, the selling and buying forces appear to have temporarily reached a stalemate. The indicators have flatlined, illustrating a phase of consolidation following recent losses. The Relative Strength Index (RSI) is notably flat, entrenched within the negative zone, which might hint at a persisting bearish sentiment. The Moving Average Convergence Divergence (MACD) also insinuates a slight shift in momentum with flat red bars, proposing the possibility of a period of consolidation.

Gold has recorded a surprisingly strong performance despite interest rates reaching a two decade high in the US and Western world. Strategists at TD Securities analyze the yellow metal’s outlook.

Fed will cut starting around the middle of the year

Gold (XAU/USD) could trade well above the $2,300 level for a time next quarter, strategists at TD Securities say.

Positioning, Fed credibility angst are catalysts for Gold upside

Gold price is treading water while defending the $2,030 level. Economists at Commerbznka analyze the yellow metal’s outlook.

Optimism for rapid interest rate cuts only to return if inflation surprises to the downside

Gold prices holding up on central bank purchases. Economists at the National Australia Bank analyze the yellow metal’s outlook.

Robust central bank purchases

• Gold price sticks to the range-bound trade near $2035, adding 0.05% on the day. 
• US weekly Jobless Claims fell more than expected last week.
• Fed’s Barkin said the central bank should be patient with rate cuts despite remarkable data showing that inflation is dropping.
• Dallas Fed L. Logan is set to speak later on Friday.

Gold price (XAU/USD) consolidates in a narrow trading band around $2035 region per troy ounce during the early Asian trading hours on Friday. Meanwhile, the US Dollar Index (DXY), an index of the value of the USD measured against a basket of six world currencies, recovers above the 104.00 mark. The US Treasury yields edge higher, with the 10-year yield standing at 4.16%.

A decline in US Initial Jobless Claims highlights the resilience of the economy and might convince the Federal Reserve (Fed) to refrain from cutting rates in the short term. Data released from the US Department of Labor reported on Thursday that US weekly Initial Jobless Claims dropped to 218K for the week ended February 3 from 227K in the previous week, above the market consensus of 220K. Continuing Claims fell by 23K to 1.891M in the week ended January 27.

Richmond Fed President Tom Barkin said the central bank should be patient on rate cuts despite remarkable data showing that inflation is dropping. Minneapolis Fed President Neel Kashkari stated on Wednesday that he believes two or three rate cuts will take place in 2024, while Fed Governor Adriana Kugler said that the need for further data to confirm inflation is heading back to the central bank’s 2% target. 

Investors looked into recent comments from Fed officials, which implied fewer rate cuts for 2024 than initially anticipated. This, in turn, weighs on the yellow metal as the high-for-longer narrative in the US diminishes the incentive for investors to buy gold as it pays no interest, thus resulting in a lower gold price.

On Thursday, Israeli troops attacked areas in Rafah, the southern border city where more than half of Gaza's population is hiding, a day after Prime Minister Benjamin Netanyahu rejected a proposal to end the war, reports Reuters. The rising geopolitical tensions in the Middle East could benefit traditional safe-haven assets like gold. 

Looking ahead, Dallas Fed L. Logan is scheduled to speak later on Friday. In the absence of top-tier economic data from the United States, risk sentiment is likely to play a significant influence on the gold price. 

Despite a progressively more restrictive monetary policy environment since early 2022, Gold recorded a surprisingly strong performance. It hovered above $2,000 for a significant part of the last twelve months. Economists at TD Securities analyze the yellow metal’s outlook.

XAU/USD to average $2,200 next quarter

• Gold price oscillates in a narrow trading range around $2,035 on the softer USD. 
• Four Fed officials emphasized that they don’t see an urgent case to cut rates and more evidence of inflation data is needed. 
• The ongoing Middle East geopolitical tension might boost traditional safe-haven assets like gold. 
• The January Chinese Consumer Price Index (CPI) and Producer Price Index (PPI) will be the highlights on Thursday. 

Gold price (XAU/USD) remains confined in a narrow trading band above the $2030 mark per troy ounce during the early Asian trading hours on Thursday. Four Federal Reserve (Fed) officials emphasized that they don’t see an urgent case to cut rates, and the central bank would like to see more evidence of inflation data before it acts. The yellow metal benefits from the safe-haven flow amid the ongoing geopolitical tensions in the Red Sea. The gold price currently trades near $2,035, adding 0.07% on the day. 

Meanwhile, the US Dollar Index (DXY), an index of the value of the USD measured against a basket of six world currencies, drops to the 104.00 mark. The US Treasury yields edge lower, with the 10-year yield standing at 4.11%.

Fed Governor Adriana Kugler, Boston Fed President Susan Collins, Minneapolis Fed President Neel Kashkari, and Richmond’s Thomas Barkin were all noncommittal on when the US central bank can start reducing the Fed’s benchmark lending rate from a two-decade high, despite a marked improvement in inflation last year.

Fed Governor Adriana Kugler, Boston Fed President Susan Collins, Minneapolis Fed President Neel Kashkari, and Richmond's Thomas Barkin were all noncommittal to talk about the timeline of interest rate cuts, despite a significant improvement in inflation last year. The languages generally match Fed Chair Jerome Powell's message from the previous week, which emphasized that the US central bank isn't ready to begin rate cuts until policymakers are confident that inflation is on track to reach the 2% target. 

Investors have pared bets on a March rate reduction and are anticipating the first rate cuts in the May meeting. That being said, the high-for-longer narrative in the US diminishes the incentive for investors to buy gold as it pays no interest, thus resulting in a lower gold price.

However, the escalating geopolitical tension in the Middle East might lift traditional safe-haven assets like gold and cap the downside of yellow metal. Since Friday, the US military has carried out dozens of airstrikes on sites in Iraq, Syria, and Yemen. Joe Biden's government said that the wave of strikes was in retaliation to a drone strike that killed three US troops at a military base in Jordan on January 28, as well as continued attacks on commercial ships in the Red Sea by Yemen's Houthi militia.  

Looking ahead, the January Chinese Consumer Price Index (CPI) and Producer Price Index (PPI) will be released on Thursday. On the docket, the weekly Initial Jobless Claims, Wholesale Inventories, and the speech by Fed’s Barkin (Richmond) will be later on Thursday. 

Gold benefited from falling US yields and rose toward $2,040 on Tuesday. Economists at ANZ Bank analyze the yellow metal’s outlook.

Market’s expectations of an imminent rate cut by the Fed have been in a state of flux

Gold under pressure after US labor market data. Economists at Commerzbank analyze the yellow metal’s outlook.

Even a rate cut at the May meeting is no longer considered to be a foregone conclusion

• Gold price struggles to gain traction and is influenced by a combination of diverging forces.
• Hawkish Fed expectations, elevated US bond yields and a bullish USD weighs on the metal.
• Geopolitical risk, along with China’s economic woes, lends some support to the commodity.

Gold price (XAU/USD) is seen oscillating in a narrow trading band during the Asian session on Tuesday and consolidating its losses registered over the past two days, to over a one-week low around the $2,015 area touched the previous day. The mixed fundamental backdrop, however, warrants some caution for bearish traders and before positioning for an extension of last week's retracement slide from the $2,065 region, or a one-month peak.

The US Dollar (USD) stands tall near its highest level in almost three months and remains well supported by expectations that the Federal Reserve (Fed) will keep interest rates higher for longer, bolstered by Friday's upbeat US jobs data. Adding to this, the Institute for Supply Management (ISM) reported on Monday that its Non-Manufacturing PMI increased to 53.4 in January from the 50.5 previous. This, along with hawkish comments by influential FOMC members, further forced investors to scale back their expectations for a more aggressive policy easing by the Fed in 2024.

In an interview with the CBS News show "60 Minutes" that aired on Sunday, Fed Chair Jerome Powell said that the central bank could be patient in deciding when to cut interest rates. On Monday, Minneapolis Fed President Neel Kashkari said that officials have time to gauge incoming data before easing, while Chicago Fed President Austan Goolsbee reiterated that he would like to see more of favourable inflation data. This remains supportive of elevated US Treasury bond yields, which continue to underpin the buck and should act as a headwind for the non-yielding Gold price.

Meanwhile, the view that the Fed is not ready to call victory over inflation just yet, along with the risk of a further escalation of geopolitical tensions in the Middle East and China's economic woes, tempers investors' appetite for riskier assets. The anti-risk flow led to the overnight corrective decline in the US equity markets and turns out to be the only factor lending support to the safe-haven Gold price. In the absence of any relevant market-moving economic releases from the US, this makes it prudent to wait for strong follow-through selling before confirming a near-term bearish breakdown.

Technical levels to watch

Gold climbed to its highest level since early January above $2,060 but corrected sharply lower following strong US labour market report. Economists at TD Securities analyze the yellow metal’s outlook.

XAU/USD could trend down toward $2,005-$2,014 support

Gold managed to end the week higher after erasing a majority of weekly gains on Friday. Strategists at TD Securities analyze the yellow metal’s outlook.

Rates will likely drop before the inflation target is reached

• Gold price kicks off the new week on a positive note despite the stronger US Dollar.  
• The US Nonfarm Payrolls (NFP) report came in better than expected; the Unemployment Rate was unchanged in January. 
• The rising geopolitical tensions might lift traditional assets like gold. 
• Investors await Fed Chair Jerome Powell’s speech, Chinese Caixin Services PMI, and US ISM Services PMI. 

Gold price (XAU/USD) holds positive ground during the early Asian session on Monday. The upbeat US jobs report dampened hopes for a March rate cut, which weighs on the yellow metal. Nevertheless, the downside of the gold price might be limited amid the ongoing geopolitical tensions in the Middle East. At press time, the gold price is trading at $2,038, gaining 0.12% on the day. 

On Friday, the US Nonfarm Payrolls (NFP) report came in better than expected, surging to 353K in January from 333K in December (revised up from 216K). The Unemployment Rate was unchanged at 3.7%. Finally, wage growth is firming, with Average Hourly Earnings growing 4.5% YoY in January from 4.4% in December. The Greenback attracted some buyers following the job reports. Traders reduced their bets on an interest rate cut in May, and the probability of a March rate cut has dropped to 19%, compared to 38% just a day ago, according to the CME FedWatch tool. It’s worth noting that the higher-for-longer rate narrative reduces gold's appeal since it provides no yield.

Nonetheless, the United States and the United Kingdom launched large-scale military attacks on Saturday against multiple sites in Yemen controlled by Houthi militants as the Biden administration continued its Middle Eastern revenge campaign against Iran-backed rebels, according to the New York Times. The escalating geopolitical tensions might boost traditional assets like gold.

Looking ahead, Fed Chair Jerome Powell is set to speak on late Sunday and will be closely watched by traders. Market players will keep an eye on the Chinese Caixin Services PMI and US ISM Services PMI data on Monday. These events could give a clear direction to the gold price.