On Wednesday, gold prices dropped by approximately 1%, bringing the metal to its lowest level since the end of 2020. The markets responded positively to the US retail sales data that was higher than expected, following the even higher than anticipated CPI report from the day before.[0] The US Dollar and XAU/USD exhibited an inverse relationship as a result of both events, which caused an increase in the US Dollar.[0]
Marc Despallieres, Chief Strategy and Trading Officer at Vantage, noted that gold prices were falling towards the $1,830 mark as the US dollar regained strength and the benchmark 10-year US Treasury bond yield kept climbing, exerting heavy pressure on gold price. As for the Bollinger Bands, the price was falling between downward-moving average and lower band, which is a typical pattern of a downtrend.[1]
Amit Sajeja, Vice President — Research at Motilal Oswal, explained that gold prices dropped to a one-month low in domestic markets after strong US economic data that pulled the US dollar to around a six-week high. This put an ease on US recession fears and led to huge buying interest in the US dollar.[2] As of now, gold price has immediate support placed at $1,830 levels in the international spot market whereas $1,800 levels is expected to remain a sacrosanct support for the yellow metal.[1]
ANZ cautioned that from a technical standpoint, gold could dip beneath $1,800 an ounce in the short-term. This week, the bank suggested that if there were to be a further selloff, it could confirm prices dropping below USD1,800/oz.[3]
This week, gold prices were negatively impacted by a surge in short-term Treasury yields, resulting in a more significant inversion of the U.S. yield curve – an indication that markets are beginning to anticipate an upcoming recession.[4] If losses hold, the anti-fiat yellow metal is headed for its worst monthly performance since June 2021.[0] Expectations of a Federal Reserve rate cut have been waning, leading to an increase in Treasury yields and further weighing on gold prices.[0]
Ready to trade today’s gold prediction?[5] Below is a compilation of some of the top XAU/USD brokers to consider.[6] Investors should also understand the risks associated with foreign exchange trading and seek advice from an independent financial or tax advisor if they have any questions.[2]
0. “Gold Prices Aim for Worst Month Since June 2021 as Retail Traders Boost Long Bets” DailyFX, 16 Feb. 2023, https://www.dailyfx.com/news/gold-prices-aim-for-worst-month-since-june-2021-as-retail-traders-boost-long-bets-20230216.html
1. “Gold rates today at one month low on ease in US recession fears. Experts see more correction | Mint” Mint, 16 Feb. 2023, https://www.livemint.com/market/commodities/gold-rates-today-at-one-month-low-on-ease-in-us-recession-fears-experts-see-more-correction-11676530264207.html
2. “Gold continues descend as start-of-the-year rally falters” ForexLive, 15 Feb. 2023, https://www.forexlive.com/news/gold-continues-descend-as-start-of-the-year-rally-falters-20230215/
3. “What’s happening with gold price after hawkish Fed speakers, strong data” Kitco NEWS, 15 Feb. 2023, https://www.kitco.com/news/2023-02-15/What-s-happening-with-gold-price-after-hawkish-Fed-speakers-strong-data.html
4. “Gold prices recover from 5-week low, but Fed fears limit gains By Investing.com” Investing.com, 16 Feb. 2023, https://www.investing.com/news/commodities-news/gold-prices-recover-from-5week-low-but-fed-fears-limit-gains-3004909
5. “Gold Technical Analysis: Gold Price Corrects Downwards | MENAFN.COM” MENAFN.COM, 15 Feb. 2023, https://menafn.com/1105577902/Gold-Technical-Analysis-Gold-Price-Corrects-Downwards
6. “Gold Forecast: Downwards Pressure Fades, But a Break Below $1830 Will Suggest $1800” DailyForex.com, 16 Feb. 2023, https://www.dailyforex.com/forex-technical-analysis/2023/02/gold-forecast-february-16-2023/191554