Article by: ETO Markets

Prior to lowering the Fed Fund rate, Federal Reserve policymakers stressed last week that more proof of inflation progress is required. The main data will be the January CPI data, which is expected to show an increase of 3.0% YoY and 0.2% MoM on Tuesday. The Core CPI, which is projected to rise by 3.8% YoY and 0.3% MoM, does not include volatile prices for food and energy.

The biggest drop in 15 years was seen in China's inflation in January, which decreased by 0.8% YoY. This emphasizes the potential for deflation in the second-biggest economy in the world. However, the additional stimulus measures implemented by Chinese authorities to stimulate the market may limit the downside of gold.

The 4-hour chart makes the bearish thesis more evident. The XAU/USD is currently rushing below a flat 100-SMA and developing below all of its moving averages, both around $… Technical indicators continue their strong downward trend, getting close to oversold readings but not close to indicating a possible downward exhaustion. The immediate support awaits at $….