GOLD: XAU/USD Eyes US CPI Below $2,030 Range
- Gold price remains within the range of $2,025 on Monday.
- Several Fed officials concur that the FOMC should take time to evaluate economic data before considering rate cuts.
- Increasing geopolitical tensions in the Middle East following Israel’s rejection of a ceasefire offer from Hamas could boost the price of gold.
- Gold traders are anticipating the release of US January CPI inflation data on Tuesday.
XAUUSD is moving in box pattern and market has reached resistance area of the pattern
– The likelihood of a significant movement in gold is low due to uncertainty surrounding interest rates.
– The Japanese market is closed for the National Day holiday, and markets in Hong Kong, Singapore, and mainland China are closed for the Lunar New Year holiday.
– The current price of gold is trading near $2,025, experiencing a slight decrease of 0.02% for the day.
– Federal Reserve Chairman Jerome Powell emphasized last week the desire for continued strong economic growth, but acknowledged the risk of inflation rising with a robust economy.
– Several Fed officials expressed the need for more time to observe inflation trends before considering rate adjustments.
– Minneapolis Fed President Neel Kashkari and Boston Fed President Susan Collins agreed that the Federal Open Market Committee (FOMC) has sufficient time to evaluate economic data before making decisions on rate cuts.
– Market participants will focus on the US January inflation data scheduled for release on Tuesday, particularly the expected slowdown in the headline Consumer Price Index (CPI) from 3.4% in December to 3.0% in January.
– The inflation reports in the coming months could play a crucial role in determining the timing of potential Fed rate cuts.
XAUUSD is moving in box pattern and market has fallen from the resistance area of the pattern
– Ongoing geopolitical tensions in the Middle East, particularly after Israel’s rejection of a ceasefire offer from Hamas, may drive demand for traditional safe-haven assets like gold.
– However, the potential upside for gold may be limited if there are indications of a worsening Chinese economy, as evidenced by China’s consumer prices dropping at the fastest rate in 15 years in January.
– Looking forward, gold traders will closely monitor the US CPI inflation data on Tuesday, followed by US Retail Sales data on Thursday and the release of the Producer Price Index (PPI) for January on Friday.
– Market participants will analyze these data releases to identify trading opportunities related to the gold price.
– There’s a growing consensus that the Federal Reserve will maintain higher interest rates for an extended period, which acts as a deterrent for the non-yielding Gold price.
– Recent hawkish statements by influential members of the Federal Open Market Committee led investors to lower their expectations for early and aggressive interest rate cuts this year.
– Dallas Fed Bank President Lorie Logan emphasized on Friday that there’s no rush to lower rates, and she seeks further evidence on inflation to ensure sustained progress.
– Atlanta Fed President Raphael Bostic pointed out that inflation has been persistently high and there’s still progress needed, indicating that the US economy is on track towards pre-pandemic levels of activity.
– Annual revisions by the Labor Department revealed on Friday that US consumer prices rose slightly more than previously reported in October and November.
– Despite this, the US Dollar struggles to make significant gains amid uncertainty surrounding the timing and pace of potential Fed interest rate cuts this year.
– Traders opt to remain on the sidelines and await the latest US consumer inflation data on Tuesday for insights into the Fed’s approach to rate cuts before making directional trades.
– Holiday closures in Japan and China contribute to relatively thin trading volumes, leading to subdued, range-bound price movements at the start of the week.
– The Israeli military announced on Monday that it had conducted a series of strikes in southern Gaza, alleviating concerns about a broader escalation of the Israel-Palestinian conflict across the Middle East.
Central banks anticipate strong gold demand in the near future – TDS
XAUUSD is moving in Ascending channel and market has reached higher low area of the channel
– Central banks have been actively purchasing gold over the past two years, with acquisitions totaling nearly record levels.
– In 2022, central banks acquired 1,037 tonnes of gold, followed by a record-breaking acquisition of 1,082 tonnes in 2023.
– Economists at TD Securities anticipate a continuation of this trend, with expectations for strong demand for gold from central banks in the coming years.
– Approximately a quarter of central banks plan to further increase their gold reserves in the current year, indicating sustained interest in gold as a reserve asset.
– Central banks are increasingly viewing gold as a valuable asset amidst changing global economic dynamics, particularly with a growing belief in the potential diminishing role of the US Dollar in the future.
– Recent surveys suggest a heightened preference among central banks for gold as a strategic reserve asset, further reinforcing expectations for continued strong demand.
– Several factors contribute to this positive outlook for gold, including a rapid pace of central bank acquisitions, driven by efforts to diversify reserves and hedge against economic uncertainties.
– Additionally, there is renewed interest among investors in using gold as a hedge against inflation and geopolitical risks.
– Rising geopolitical tensions in regions like the Middle East and Eastern Europe have underscored the importance of gold as a safe-haven asset, further supporting demand.
– The combination of robust central bank purchases, increasing investor interest, and geopolitical uncertainties paints a favorable picture for gold demand in the foreseeable future.
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