Gold started the week with another decline, during which quotes fell to around 1850 for the first time since January 6. At the same time, from the beginning of trading, the price has returned to the support of 1860, near which gold has been located for more than a week. And today is just the day when it should finally be decided whether the main precious metal will return to growth or it will go to the January lows of 1830.
The determining factor for gold prices will be US inflation data for January, which should be published at 13:30 GMT. It is expected that the statistics, despite the forecast for a slowdown in inflation from 6.5% to 6.2%, will confirm that the price growth rate is still at a high level. This fact could potentially give the Fed a reason to keep its hawkish policy.
While gold has seen solid growth in the first few weeks of 2023, newly emerged doubts about further changes in Fed policy have brought it to naught. A surge in US Treasury yields and some recovery in the dollar also put pressure on gold quotes, as this makes the precious metals less attractive to investors.
If the inflation data meet expectations or exceed them, gold could quickly rise to the 1880-1890 range. In the future, the bulls will aim at the round level of 1900.
If the rate of price growth exceeds forecasts, a more relevant scenario would be a decline in gold to 1830, where the main precious metal was traded at the very beginning of the year. The RSI indicator also confirms the downward movement, which is already close to the oversold zone but still hasn’t yet entered it, which means that a signal for a reversal hasn’t yet been formed.
We may offer you the following option of trading strategy:
If the US inflation data don’t meet expectations — sell gold in a range of 1855-1865. Take profit — 1830. Stop-loss — 1880.
Also, traders can use Trailing stop instead of fixed Stop-loss at their disposal.
This content is for informational purposes only and is not intended to be investing advice.