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Gold Relies on Optimistic US Inflation Data

2/14/2023 10:45 AM

The XAU/USD pair shows an uncertain growth, testing 1860.00 and slightly recovering from the decline the day before, as a result of which gold again updated local lows from January 6.

The precious metal quotes remain under pressure from the rhetoric of the US Federal Reserve, which last year took a much more "hawkish" stance compared to other central banks, and at the last meeting signaled that the tightening of monetary conditions will continue. Thus, the New Year's "bullish" rally in gold seems to have run its course. However, the instrument may be supported by the activity of banks that have been buying gold since the beginning of this year, trying to minimize their losses against the backdrop of rapid inflation, which could turn into a global recession. According to the World Gold Council (WGC), at the end of 2022, demand for the asset in the global market increased by 18.0%, to 4.741 thousand tons, the highest since 2011. The average daily trading volumes in the precious metal in January added 35.0% compared to the previous month, and exchange derivatives added 58.0%, which indicates the return of investor interest in the asset.

Today at 15:30 (GMT+2) macroeconomic statistics from the US on the Consumer Price Index for January will be published. According to preliminary estimates, the annual inflation rate decreased from 6.5% to 6.2%, which may be the lowest since the second half of 2021. At the same time, in monthly terms, analysts do not exclude the acceleration of dynamics from 0.1% to 0.5%. Gold buyers hope that the data will be strong, and the indicator will continue to systematically fall to the target level of 2.0%, which will allow the US Federal Reserve to somewhat slow down the pace of interest rate increases. The next meeting of the US regulator will be held on March 21-22, and current forecasts (more than 90% of analysts) suggest that the value will again be increased by 25 basis points to 5.0%, after which a pause in the monetary policy tightening cycle should not be ruled out.

Bollinger Bands in D1 chart demonstrate a stable decrease. The price range is changing slightly, but remains rather spacious for the current level of activity in the market. MACD is going down preserving a stable sell signal (located below the signal line). The indicator is trying to consolidate below the zero level. Stochastic, on the contrary, is still inclined to rise, signaling the risks of gold being oversold in the ultra-short term.

Resistance levels: 1869.49, 1886.46, 1900.00, 1915.00. | Support levels: 1850.27, 1828.22, 1816.62, 1800.00.

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