Gold price growth may resume from mid-week

Gold prices are correcting on Monday ahead of the U.S. economic data and Fed’s preferred inflation gauge. The indicators are to be published this week.

Over the past week, the yellow metal showed its biggest weekly decline in the last month and a half after Fed officials expressed doubts about the imminent interest rate cut. Chicago Fed President Austen Goolsbee stressed the need for more inflation data before making decisions on interest rate adjustments. At the same time, Atlanta Fed President Raphael Bostic indicated that rates might be cut starting from the third quarter.

This January, the U.S. consumer confidence index reached its highest level since the summer of 2021, according to a survey released last week. This increase occurred against the backdrop of a stable labor market and retail sales, indicating a robust economy.

With the U.S. central bank's upcoming meeting scheduled for January 30-31, its officials are refraining from public comments this week.

The possibility of the Fed’s interest rate cuts in March decreased to 51% from 71% two weeks ago, according to LSEG's interest rate probability app IRPR.

Investors will be carefully monitoring the preliminary estimates of U.S. GDP for the fourth quarter due on Thursday and Personal Consumption Expenditures (PCE) data on Friday.

Gold prices on the H2 chart show a downtrend. The price growth is limited by the trend resistance. Divergence of Relative Strength Index (RSI) (standard values) suggests the price exit from the corrective channel with a change in the direction of the yellow metal price movement towards growth. However, the absence of strong data at the beginning of the week may adjust the gold price to the support area of 1990.00.

Signal:

The short-term outlook for GOLD suggests buying near the level of 1,990.00. 

The target is at the level of 2,070.00.

Part of the profit should be taken near the level of 2,040.00.

A Stop-loss could be set at the level of 1970.50.

The bullish trend is short-term, so trade volume should not exceed 2% of your balance.