The greenback weakened in early market session trade as gold approached seven-month highs this week, with signs of a slowing jobs market increasing the likelihood of softer US inflation data.
“The gold market was at one point just $25 away from its key resistance $1,900 an ounce level on Friday,” Kitco News’ Anna Golubova reported.
And Investing.com’s Ambar Warrick said prices for the yellow metal on Tuesday “hovered near seven-month highs as markets awaited more cues on US monetary policy from an upcoming speech by Federal Reserve Chair Jerome Powell, as well as key inflation data.”
After Federal Reserve chair Jerome Powell spoke on Tuesday, other key data this week includes the release of US CPI and jobless figures on Thursday.
Golubova said: “Inflation is one of the key reports that gold will pay close attention to ... especially after the Fed minutes from the December meeting showed that US central bank officials feel more work needs to be done to battle price pressures.
“Market consensus calls are looking for the annual inflation number to slow to 6.5 per cent in December from November’s 7.1 per cent print.”
Investing.com’s Peter Nurse said: “Traders are now factoring in the Fed toning down its aggressive monetary tightening policy, with a 25-basis point hike now widely expected in February, down from an increase of 50 basis points in December.
“This followed the release of the monthly official US jobs report [last] Friday, which showed nonfarm payrolls rising by a relatively benign 223,000 jobs in December, while average hourly earnings climbed 0.3 per cent, smaller than expected and less than the previous month’s 0.4 per cent.
“Additionally, US services industry activity contracted for the first time in more than two and a half years in December, more evidence of a cooling economy.”
Gold prices were moving in an uptrend in the daily charts from $1,730 to $1,875 per ounce on Monday, says PP Link Securities business manager Chhea Chhayheng, testing the November 2021 resistance of $1,875 per ounce.
And if gold prices fail to break the resistance, it would rebound to $1,800, the key support level.
Bannockburn Global Forex managing director Marc Chandler told Kitco News that “as long as the yellow metal holds above the $1,825-$1,830 area, the upside looks favoured”.