Choose country & language:

Gold prices steady as markets await US inflation

Home >  Daily Market Digest >  Gold prices steady as markets await US inflation

Written by:
Myrsini Giannouli

11 January 2023
Share the article

Gold prices remained steady on Tuesday, trading sideways with low volatility as markets await the US inflation print on Thursday. On Tuesday, gold tested the $1,877 per ounce resistance but failed to cross that threshold. If gold prices continue to increase, further 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 remained steady on Tuesday, ahead of the US inflation report on Thursday. The dollar index oscillated with low volatility around the 103.2 level. 

US Treasury yields gained a little strength on Tuesday on marginally hawkish Fed rhetoric, with the US 10-year bond yielding 3.62% to 3.52%. 

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. Several major Central Banks, such as the Fed, the ECB, and the BOE raised interest rates considerably in the past year. A worldwide wave of fiscal tightening has been driving gold prices down.

On Tuesday, Federal Reserve Chairman Jerome Powell stressed that the Fed will have to make tough decisions to bring US inflation down. The Fed Chair, however, carefully avoided commenting directly on the central bank’s monetary policy outlook, turning market attention to the US inflation report later in the week. US CPI data are scheduled to be released on Thursday and are this week’s most highly anticipated fundamentals, as they may influence the Fed’s monetary policy.

Increased global recession concerns, however, raise the appeal of gold as an investment. In China, prolonged Covid lockdowns have significantly affected the economy. A diminishing economic outlook may force central banks around the world to pivot to a more dovish fiscal policy. Even though inflation rates remain high, signs of cooling price pressures have reduced rate hike expectations, providing support for gold prices.

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.

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

Yen weakness increases intervention risks

Myrsini Giannouli 29 September 2023

Gold dips on hawkish Fed speak

Myrsini Giannouli 29 September 2023

Oil price rally halted on interest rate concerns

Myrsini Giannouli 29 September 2023

Crypto markets bullish on hopes of Ethereum ETF

Myrsini Giannouli 29 September 2023
Why TopFX
10-years
13+ 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!

-->