16 Jan 2025

• Gold price consolidates gains near $2,700, with eyes on US Retail Sales data.
• Tame US inflation data revive aggressive Fed rate cut talks, undermining the US Dollar and Treasury bond yields.
• Gold price looks north amid a bullish technical setup on the daily chart.
• Gold price is trading close to the highest level in five weeks just above $2,700 in Thursday’s Asian trading. Traders look forward to a fresh batch of US economic data for the next leg higher in Gold price.

• Attention turns to US Jobless Claims and Retail Sales data

  This week's subdued inflation figures from the United States have rekindled expectations for potential interest rate reductions by the US Federal Reserve (Fed), contributing to a decline in the US Dollar (USD) and a decrease in US Treasury bond yields from their multi-month peaks. This development has bolstered the price of Gold, with buyers momentarily pushing it back above $2,700 during early trading in Asia on Thursday.
  
  Market participants have increased their bets on a Fed rate cut in June, reflecting heightened expectations for a second reduction in 2025 following the latest inflation data. The report suggested that the market's previous assumptions regarding the elimination of rate cuts this year were overly optimistic.
  
  The US Consumer Price Index (CPI) rose in accordance with projections, reaching an annual rate of 2.9% in December, up from 2.7% in November. However, the core CPI, which excludes food and energy costs, increased by 3.2%, falling short of the anticipated 3.3%. On Tuesday, the annual Producer Price Index (PPI) for December rose by 3.3%, below the expected 3.4% increase, while core PPI inflation reached 3.5% year-on-year (YoY), compared to the market forecast of 3.8%.
  
  The dovish outlook for the Fed, combined with optimism surrounding Chinese stimulus measures and diminishing concerns over the potential trade tariffs from President-elect Trump, has fostered a risk-on sentiment in the market. This environment has kept the safe-haven US Dollar relatively weak and supported elevated Gold prices.
  
  Looking forward, attention will turn to upcoming economic data releases from the US, including December's Retail Sales and weekly Jobless Claims, which are expected to provide further insight into the Fed's interest rate strategy beyond January. The markets have already fully accounted for a rate-pause decision at the Fed's policy meeting later this month. Additionally, the price of Gold will likely be influenced by any speculation regarding Trump's tariff initiatives.

  Gold price technical analysis: Daily chart

   The short-term technical perspective for Gold prices remains favorable for buyers, following last week’s breakout from a symmetrical triangle pattern.
  
  The 14-day Relative Strength Index (RSI) is trending upwards, currently positioned above the midpoint at approximately 60, indicating that Gold prices are likely to be viewed as a 'buy-the-dips' opportunity in the near future.
  
  For a new upward trend to commence, Gold prices need to achieve a daily candlestick close above the $2,700 threshold, paving the way towards the psychological level of $2,750.
  
  Before reaching that target, the high of $2,726 recorded on December 12 will pose a challenge to bearish positions.
  
  On the other hand, significant support is found at the January 15 low of $2,670, and if this level is breached, sellers will need to penetrate the $2,640 demand zone.
  
  This area represents a convergence of the 21-day Simple Moving Average (SMA), 50-day SMA, 100-day SMA, and the triangle convergence, establishing it as a robust support level.
  
  Should the downward pressure intensify, the January 6 low of $2,615 may provide a refuge for buyers.