The bears in the GOLD market are gaining momentum and setting their sights on the critical level of $1,825, which has been a key support level since t
The bears in the GOLD market are gaining momentum and setting their sights on the critical level of $1,825, which has been a key support level since the beginning of the downtrend in early February. As of now, the price of GOLD is hovering around $1,826, due in part to the recent surge of the US dollar fueled by pent-up demand.
The US dollar has recently gained strength, as reflected by its upward movement against a basket of currencies. A break above a key resistance level, which marked the end of a period of consolidation, has added to the strength of this bullish trend. But it’s important to note that the USD had already moved past previous bullish support lines when the break happened. This USD rally has been helped by the Federal Reserve’s hawkish stance and good economic news. The DXY index closed above the crucial level of 103.65/80 on Thursday and Friday, indicating that the bulls are in control and poised to continue driving the USD higher.
On Thursday, new data revealed that the Producer Price Index (PPI) experienced a sharp increase of 0.7% in January. This marked a sudden turnaround from December’s decline of 0.2% and exceeded the expected 0.4% rise. The year-over-year figure showed a 6% increase, which was higher than the estimated 5.4% but represented a slight decrease from the prior figure of 6.5% (which was revised upward).
The core Producer Price Index (PPI), which excludes volatile food and energy prices, rose by 0.6% in January, a significant increase compared to the previous month’s rate of 0.2%. On an annual basis, the core PPI increased by 4.5%, a slight decrease of 20 basis points from the prior month.
This PPI data was released after a strong Nonfarm Payrolls report for January, which was published on Friday. Furthermore, Thursday’s jobs market data confirmed that the labor market continues to show significant momentum, with positive signs for continued growth.
According to the Labor Department, jobless claims remained below 200,000 for the fifth consecutive week, indicating a healthy level of employee turnover. In addition, recent data shows that retail sales surged by 3% in January, surpassing expectations despite rising inflation, which suggests that the US economy remains strong.
Meanwhile, on Tuesday, the Consumer Price Index (CPI) inflation rate for January was reported at 6.4%, representing a slight decrease from December’s rate of 6.5% but still above market expectations of 6.2%. This was the lowest rate since October 2021. In addition, the services PMI data for the previous month was also remarkably high.
Gold Technical Outlook
The price of GOLD is currently showing a slightly negative trend, hovering near the 1828.70 level. If it breaks through this level, it could confirm a continuation of the recent correctional bearish wave, with the next potential target being 1788.20.
The bearish outlook is supported by the EMA50 and requires the GOLD price to remain below 1878.80 in order to maintain the expected decline.
For today’s trading, we anticipate a range between support at 1820.00 and resistance at 1855.00. Overall, we expect a bearish trend to continue.
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