- Gold price is expected to continue its four-day losing streak amid hawkish Fed bets.
- Investors should be prepared for a surprise rise in US Durable Goods Orders as the households’ demand has accelerated lately.
- Gold price is trading in a Falling Channel chart pattern in which every pullback is considered a selling opportunity.
Gold price (XAU/USD) is demonstrating a topsy-turvy auction around $1,810.00 in the Asian session. The precious metal is expected to continue its four-day losing streak after surrendering the immediate support of $1,809.00 as Federal Reserve (Fed) policymakers see interest rates above 5% after January’s hot inflation data..
Cleveland Fed Bank President Loretta Mester cited “Will need to go above 5% funds rate, stay there for a while.” He further added, “Data shows inflation not yet on trend to get back sustainably to 2% target.”
An escalation in the United States Personal Consumption Expenditure (PCE) price index by 0.6% in January has cleared that it would be early announcing victory for the battle against inflation. A strong labor cost index has propelled consumer spending, which could result in a recovery in the Producer Price Index (PPI) ahead.
The US Dollar Index (DXY) is struggling to continue the upside move toward the 105.00 resistance. S&P500 futures are showing nominal gains after a bearish Friday, portraying a sheer drop in the risk appetite of the market participants. The return delivered on 10-year US Treasury bonds has dropped marginally below 3.94%.
Going forward, the Gold price will display action post the release of the US Durable Goods Orders (Jan) data. The street is expecting a contraction of 4% lower than the expansion of 5.6% released earlier. Investors should be prepared for a surprise rise as the households’ demand has accelerated lately.
Gold technical analysis
Gold price is trading in a Falling Channel chart pattern in which every pullback is considered as a selling opportunity before a reversal move. The yellow metal is expected to find resistance around $1,820.00 after a minor pullback move.
The 50-period Exponential Moving Average (EMA) at $1,833.80 is acting as a major barricade for the Gold bulls.
The Relative Strength Index (RSI) (14) is oscillating in the bearish range of 20.00-40.00, which advocates further downside.
Gold hourly chart
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Gold has long been considered a safe haven during times of financial volatility, with many investors turning to the precious metal in times of difficulty. However, the latest gold price forecast from analysts is suggesting that price could soon dip below the $1,800 mark as the Federal Reserve looks set to raise interest rates above 5%.
The latest gold price forecast comes as the US Dollar Index (DXY) has hit a three-year high, providing additional pressures on gold prices. As the US central bank nears a decision to begin increasing interest rates, there are concerns that further gains in the Dollar could push gold prices even lower.
If the Federal Reserve were to take decisive action to raise rates above 5%, it could spark additional volatility in the global markets. This could drive investors away from gold, pushing the gold price down to the $1,800 range or even lower.
Analysts also point to rising global tensions, such as the risks presented by North Korea, as key factors that could influence the gold price forecast. Should these tensions rise, it could lead to increased demand for gold as an investment asset.
At the same time, rising investor appetite for gold could also be curtailed by a strengthening US economy. If the US economy continues to expand and wages increase, it could make gold seem less attractive as a safe haven asset.
Given the current macroeconomic landscape, it appears that gold prices could decline in the short-term. However, analysts remain cautiously optimistic that gold prices could make a comeback in the long-term if global events and financial conditions permit.