- The price of gold rose above $1,900 to extend its weekly gains.
- Gold prices increased as a result of traders' predictions that the US Federal Reserve will decrease the rate hike pace.
- Price analysis of gold: Daily closes above $1,920 may open the door for a move toward $2,000
On Friday, the price of gold reached a fresh nine-month high of $1,913.18 amid investor speculation that the US Federal Reserve (Fed) could adopt a less aggressive attitude in response to the publication of weaker inflation data. Consequently, XAU/USD is currently trading at $1,912, up 0.82%, and is on track to post gains for a fourth straight week.
Speculations about a less aggressive Fed and declining US bond yields helped XAU/USD
While Wall Street is preparing for a lacklustre morning, global stocks are still fluctuating. In the US, the start of the earnings season saw banks like Bank of America and JP Morgan beat forecasts while Wells Fargo failed them, according to Q4 data. The US inflation report released on Thursday, which showed that the Consumer Price Index (CPI) for December fell below 7% and the core CPI fell below 6%, was well received by the financial markets.
The dollar is launching a recovery in the meantime, but gold traders are ignoring it. The US Dollar Index, which measures the value of the dollar in relation to a group of rival currencies, has recovered some of its weekly losses and is now up 0.18% at 102.418.
US Treasury bond yields are another factor supporting the recent market behaviour of XAU/USD
Even though it has decreased by 12 bps over the past week, the benchmark 10-year note rate declines one basis point to 3.434%.
The probability of the Federal Reserve raising interest rates by 25 basis points after the release of US inflation data are 94.2%, according to the CME FedWatch Tool.
Consumer Sentiment for January from the University of Michigan exceeded expectations and came in at 64.6 instead of the expected 60.5. Consumer inflation expectations decreased from 4.4% to 4% during the course of one year, whereas they increased from 2.9% to 3% over the course of five years.
Technical analysis of the gold price
On the basis of the daily chart, it appears likely that XAU/USD may rise further now that the daily high of $1909.80 set on May 5, 2022, has been broken. Relative Strength Index (RSI) oscillators, which are overbought but still below the 80 level, indicate that the rally is still gaining momentum. The Rate of Change (RoC), on the other hand, suggests that buyers are gaining pace.
The high point of April 29 ($1,919.90), followed by April 18 ($1,998.39), which is just under $2,000, would serve as major resistance levels for gold.
Aleksandra Kwiecien
Content manager
Marketing and content manager. Passionate about new technologies that make our everyday life easier, and people who create them.