​Gold prices stumble on inflation reacceleration

2024-01-18
Summary:

Gold prices bounced from its one-month low on Thu though strong economic data strengthened the US dollar and Treasury yields put a lid on the rally.

Gold prices bounced from its one-month low on Thu though strong economic data strengthened the US dollar and Treasury yields put a lid on the rally.

Gold

Traders are now pricing in around a 53% chance of a rate cut in March, according to theCME FedWatch tool. Inflation US consumer prices rose 3.4% in Dec, accelerating from 3.1% a month before.


The 10-year Treasury yield hits 5-week high, hovering around 4.1%, as the latest better-than-expected retail sales data in Dec indicated strong consumer demand at the holidays.


Inflation reports released this week across the pond bolstered concerns over the bumpy road to disinflation. UK inflation posts first rise in almost a year and eurozone inflation reversed six months of consecutive falls.


Iran launched missile and drone strikes on targets in Iraq, Syria and Pakistan on Wed, provoking a wider Middle East conflict. However, billion barely reacted to the surprising attack.


Dec widened 2023’s global gold ETF losses to US$15bn, the third annual outflow in a row. Higher for longer interest rate environment means cash may yield a higher return than the yellow metal.

XAUUSD

Gold broke below the 50 SMA with $2,000 to provide solid support. The path of least resistance will be downward towards $1,970 if it fails to hold above the key psychological level.


Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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