Gold market analysis: U.S. retail sales strong in December, gold continues to fall sharply
On Wednesday (January 17), the United States released strong retail sales data, which stimulated the US dollar to hit a new high in a month, causing the price of gold to hit its lowest in more than a month to US$2,003.89 per ounce. Following a 1.3% drop in the previous trading day, gold continued to fall by 1.2% on Wednesday, finally closing at a low of $2,005.71 per ounce.
The U.S. Census Bureau said retail sales increased 0.6% month-on-month in December, and the November reading confirmed a 0.3% increase. Economists polled by Reuters had forecast retail sales rising 0.4% in December. Retail sales are primarily merchandise and are not adjusted for inflation. Retail sales increased 5.6% year-on-year in December. An upbeat report from the U.S. Commerce Department on Wednesday prompted economists to raise their forecasts for fourth-quarter economic growth and further cast doubt on financial markets’ expectations that the U.S. Federal Reserve will begin cutting interest rates in March. Data released this month showed strong growth in employment and wages in December, and rising consumer prices. The development of the data has led many economists in the United States to believe that the U.S. economy is performing well enough that economists can withdraw their forecasts for a recession this year. For Fed policymakers, the economy is neither overheated nor too cold, which gives the Fed more flexibility in monetary policy. This is exactly what Fed Waller mentioned on Tuesday when he said the economy was “doing well” and could act cautiously and methodically on monetary policy. The CME Group’s FedWatch tool currently shows that the market expects the probability that the Federal Reserve will cut interest rates for the first time in March by at least 25 basis points, falling to 53.2% from 65.1% on Tuesday. The longer the timing of the U.S. dollar interest rate cut is delayed, the stronger support will be formed for the U.S. dollar, and gold will undoubtedly be under corresponding pressure.
On a technical level, on the daily chart, the price of gold fell to far below the middle track of the Bollinger Bands channel, and the 14-day relative strength index (RSI) has turned bearish (the indicator further fell below the equilibrium line), indicating that the downward pressure on gold has increased. The support at the psychological mark of 2000 below will once again face the test. If it falls below, the support near the low of $1980 in mid-December last year will face the test. On the upside, any recovery in gold prices needs to break through the triangle support (currently forming resistance at $2033/ounce), and the next stronger upward obstacle is the intersection of the 21-day moving average and the upper resistance level of the triangle at $2046/ounce. If the gold price breaks through $2,046 per ounce, new buying opportunities will arise, causing gold prices to retest the psychological level of $2,050 per ounce.
Wang Gang, Bank of China Guangdong Branch
These are my personal views only and do not represent the views of my institution.
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2024-01-18 03:37:00
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