gold is currently trading near a five-week high, surpassing the $2,700 level during Thursday’s trading session in Asia. Investors are awaiting new US economic data, which could drive the next movement in gold prices.
Recent US inflation figures have rekindled expectations for interest rate cuts by the Federal Reserve. This has contributed to a decline in the US dollar and US Treasury yields from their recent peaks, further supporting gold ’s price increase. Early trading on Thursday saw buyers briefly reestablishing the $2,700 level.
Traders have increased their bets on a potential Fed rate cut in June and are also considering the possibility of another reduction in 2025, following the release of the latest inflation report. The data suggested that prior market expectations regarding the absence of rate cuts for this year were overly optimistic.
The Consumer Price Index (CPI) in the US rose in line with expectations to an annual rate of 2.9% in December, up from 2.7% in November. However, the core CPI, which omits food and energy prices, increased by 3.2%, falling short of the anticipated 3.3%. Meanwhile, the Producer Price Index (PPI) also showed an annual increase of 3.3% for December, which was lower than the expected 3.4%.
Current market conditions are favorable for gold , as expectations of a more dovish Fed, renewed stimulus efforts from China, and easing concerns over trade policies have kept the dollar subdued and allowed gold to maintain higher levels.
Moving forward, attention will be on the upcoming US economic reports, including December’s Retail Sales and weekly Jobless Claims, which could clarify the Fed’s interest rate decisions beyond January. Analysts expect a pause in interest rate changes at the Fed’s upcoming policy meeting. The gold market’s response to speculations regarding trade tariffs will also be crucial.
From a technical perspective, the outlook for gold appears positive, bolstered by a recent breakout pattern. The 14-day Relative Strength Index indicates a bullish trend, suggesting a “buy-the-dips” strategy may be advantageous in the near term. For further upward movement, gold needs to close above $2,700, targeting the psychological level of $2,750. However, if prices dip, support is strong around $2,670, with additional support at $2,640, a key area combining various moving averages. If downward pressure persists, buyers could also benefit from the $2,615 level.
