Article by: ETO Markets
Investors will be watching the US core Personal Consumption Expenditure price index data for January, which is scheduled for release on Thursday, for new indications on the timing of rate decreases. If the underlying inflation data proves to be stickier than anticipated, the market will reduce its expectations for rate reductions. Such a result might cause the price of gold to decline.
Geopolitically, as both Israel and Hamas have played down hopes for a ceasefire, tensions between them have gotten worse. Hamas, which is supported by Palestine, reported that it has fired several missiles in the direction of northern Israel.
Negative Tuesday's announcement of US Durable Goods Orders data for January failed to spark increases in the price of gold. Investors had predicted a 4.5% decrease in new orders for durable goods, but actual orders were down 6.1%. A weak demand for durable goods is a sign that consumer spending is not expected to improve.
With the second estimate of Q4 GDP showing that the economy grew by 3.2% instead of 3.3% as expected, the US Dollar rise has temporarily stalled. The US Dollar Index surges above 104.00 as investors' need for safe-haven assets has increased due to uncertainties surrounding US economic data.
The price of gold is still struggling to generate any significant momentum on Wednesday and is stuck in a trading range that has been there for several days. Growing consensus that the Federal Reserve would hold off on decreasing interest rates until the June policy meeting has helped the US Dollar regain positive momentum. This is regarded to be a headwind for the non-yielding yellow metal. In addition, the strong underlying bullish mood surrounding the world equities markets turns out to be another factor limiting the safe-haven commodity's potential.
The two-week high that was achieved last Thursday, or near $ … , may continue to serve as an immediate barrier and limit advances for the gold price. Nevertheless, a sustained increase above this level will validate a breach of the 50-DMA barrier and open the door to further advances. The XAU/USD pair may then rise to the next significant barrier close to the $… since oscillators on the daily chart have just recently begun to show upward traction.
However, the weekly low, which is currently located around $ …, appears to be blocking the short-term decline before the 100-DMA, which is presently located around $… and the psychological $… barrier.
A major obstacle to the oil market is the rising cost of borrowing, which is slowing down the expansion of the world economy and lowering the demand for oil. Meanwhile, the Houthis, who are backed by Iran, are still attacking civilian commercial vessels in the Red Sea, and there is still uncertainty around the conclusion of the truce negotiations between Israel and Hamas.
WTI tested $ … a barrel on Tuesday, climbing back into the $… handle once more. US Crude Oil continued to rise from its low on Friday, which was at $... WTI is now churning within a choppy consolidation between $… and $... The 200-DMA of XTI/USD is still stuck around $…, and the short-term bullish momentum is still limited below the late January peak of $...
