Choose country & language:

Gold hits fresh nine-month high as dollar dips

Home >  Daily Market Digest >  Gold hits fresh nine-month high as dollar dips

Written by:
Myrsini Giannouli

25 January 2023
Share the article

Gold prices touched a fresh nine-month high on Tuesday, as the US dollar and bond yields weakened. Gold prices rose to $1,942 per ounce on Tuesday, before paring some of their gains. If gold prices continue to increase, resistance may be encountered near $2,000 per ounce, while if gold prices decline, support may be found near $1,825 per ounce.

Gold prices have been predominantly directed by the dollar’s movement, as the competing gold typically loses appeal as an investment when the dollar rises. The dollar slipped on Tuesday as markets weighed Fed rate hike expectations. The dollar index remained below the 102 level most of the day, boosted briefly by robust US economic activity data. US Treasury yields dipped on Tuesday, with the US 10-year bond yielding approximately 3.47%.   

US inflation is cooling, driving the dollar down and propelling gold prices upwards. US PPI data last week fell below expectations, declining by 0.5% in December, versus estimates of a 0.1% drop. US headline inflation also dropped to 6.5% year-on-year in December from 7.1% in November. Cooling price pressures may give the US Federal Reserve some leeway towards scaling back its interest rate increases, boosting gold prices. 

Increases in central banks’ interest rates put pressure on gold prices since assets yielding interest become a more appealing investment compared to gold as interest rates rise. Gold prices surge as the Fed and other central banks start to scale back their aggressive rate hiking. 

Gold has been in a bullish trend for the last couple of months, which is likely to continue if the Fed signals a pause in raising interest rates. Even though inflation rates remain high, signs of cooling price pressures have reduced rate hike expectations, providing support for gold prices. Gold prices are approaching overbought territory though, as they trade close to levels reached only after the crisis in Ukraine started last year.

XAUUSD 1hr chart

TRADE GOLD

The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.

Written by:
Myrsini Giannouli

Share the article:

Latest news

Dollar rallies on signs of US ‘soft landing’

Myrsini Giannouli 27 January 2023

Gold dips as the dollar rallies

Myrsini Giannouli 27 January 2023

Oil edges higher on strong demand outlook

Myrsini Giannouli 27 January 2023

Cryptocurrencies volatile in bulls vs bears fight

Myrsini Giannouli 27 January 2023

Why TopFX

10-years

10-years

industry presence
as a Liquidity Provider

Spreads

Spreads
from 0.0 pips

and reliable execution

Segregated

Segregated

client funds

First-class

First-class

customer support

Open your Live Account in 3 Steps

Step 1

Fill in the registration
form and click
"Create account".

Step 2

Once you are in the client secure area, please proceed with uploading your Proof of Identity and Proof of Residence.

Step 3

When your live account is approved, you can deposit funds and start trading on your chosen platform!