Gold Tests Critical Support Ahead Of U.S. PCE Inflation Data
Gold prices edged lower for the third day in a row on Thursday, with the spot XAU/USD touching its lowest year-to-date level below $1,830 despite the pullback seen in U.S. bond yields.
At the time of writing, the XAU/USD pair is trading at $1,823 an ounce, 0.16% below its opening price, after hitting its weakest level since December 30 at $1,817.55 an ounce.
A downward revision of U.S. economic growth in the fourth quarter triggered caution among traders, favoring the greenback in a choppy session. The Gross Domestic Product (GDP) growth was revised to 2.7% in the fourth quarter, down from the first estimate of 2.9%.
On Friday, the U.S. will release the Personal Consumption Expenditures (PCE) price index, the Fed’s preferred gauge of inflation, which is expected to show an annual rate of inflation of 4.3% in January, down from 4.4% in December, while the core PCE inflation rate is expected to ease to 4.9% from 5% the previous month.
Meanwhile, investors continue to ponder the latest Federal Open Market Committee (FOMC) minutes, which showed several participants advocated for a 50 bps rate raise and noted that further evidence of a firm downward path in inflation is still needed. According to the WIRP tool, investors are betting on higher probabilities of 76% of a 25 bps hike by the Fed in March.
From a technical viewpoint, the XAU/USD pair maintains a short-term bearish bias according to indicators on the daily chart, while the price continues to print lower lows below the 20-day simple moving average (SMA) but still holding above the 100- and 200-day SMAs.
The immediate support area stands at the 2023 lows at around $1,817. Loss of this level would risk a steeper decline, targeting the $1,800 zone and then the 100-day SMA at $1,789. On the flip side, the immediate resistance level could be found at the weekly highs around $1,850, followed by 20-day SMA at $1,870 and the $1,900 mark.
At the time of writing, the XAU/USD pair is trading at $1,823 an ounce, 0.16% below its opening price, after hitting its weakest level since December 30 at $1,817.55 an ounce.
A downward revision of U.S. economic growth in the fourth quarter triggered caution among traders, favoring the greenback in a choppy session. The Gross Domestic Product (GDP) growth was revised to 2.7% in the fourth quarter, down from the first estimate of 2.9%.
On Friday, the U.S. will release the Personal Consumption Expenditures (PCE) price index, the Fed’s preferred gauge of inflation, which is expected to show an annual rate of inflation of 4.3% in January, down from 4.4% in December, while the core PCE inflation rate is expected to ease to 4.9% from 5% the previous month.
Meanwhile, investors continue to ponder the latest Federal Open Market Committee (FOMC) minutes, which showed several participants advocated for a 50 bps rate raise and noted that further evidence of a firm downward path in inflation is still needed. According to the WIRP tool, investors are betting on higher probabilities of 76% of a 25 bps hike by the Fed in March.
From a technical viewpoint, the XAU/USD pair maintains a short-term bearish bias according to indicators on the daily chart, while the price continues to print lower lows below the 20-day simple moving average (SMA) but still holding above the 100- and 200-day SMAs.
The immediate support area stands at the 2023 lows at around $1,817. Loss of this level would risk a steeper decline, targeting the $1,800 zone and then the 100-day SMA at $1,789. On the flip side, the immediate resistance level could be found at the weekly highs around $1,850, followed by 20-day SMA at $1,870 and the $1,900 mark.
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