This Is The Next Big Catalyst for The Gold Price
The comments below are an edited and abridged synopsis of an article by Anna Golubova
Gold is suffering losses after January’s rally, during which the yellow metal saw its best start to the year in over a decade.
Gold’s bullish sentiment began to change after a strong employment report from the US showed job gains of 517,000 in January.
This was followed by Fed Chair Powell confirming markets’ worries that if the US economy continues to surprise on the upside, the central bank would be forced to raise rates higher than anticipated.
Powell reiterated that the disinflation process has begun. On the other hand, he warned that if data continue to come in stronger, the Fed will move peak rates higher.
The gold market is gearing up for a number of key macro releases. Tuesday’s CPI report could be the next big catalyst for the precious metals space.
A large cohort of investors still sees gold as overvalued, but it is unclear who would be willing to sell based on the flow perspective.
Recent central bank gold-buying has supported gold, and the market is waiting to see if that trend will continue.
The World Gold Council amended its Gold Demand Trends report recently, stating that central bank gold-buying was at a record high in 2022, with 1,136 tonnes purchased.
Gold’s potential trading range is fairly wide at the moment, with strong support at $1,800 and resistance at $1,900.
Other data to keep an eye on include US retail sales, the Producer Price Index, and industrial production.
