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On Wednesday, the gold price XAU/USD set a year low due to news about inflation in the US, which “does not want” to decline to target levels.
As a result, market participants are revising their estimates regarding the price of gold with the prospect that the Fed's tight policy may last for a longer time, as well as taking into account yesterday's news:
→ Retail Core Sales in the US fell by 0.6%, although an increase of +0.2% was expected, a month ago = +0.4%.
→ the number of unemployment applications for the week remains relatively stable: actual = 212k, a week ago = 218k, a month ago = 202k.
The XAU/USD chart shows that the price of gold is moving within a downward channel (shown in red). During the first half of February, the price managed to decline from its upper limit to its lower limit, which can be considered as evidence of the bears’ initiative. Then the current price recovery from the lower boundary may only be a correction from the oversold zone within the broader bear market.
Obstacles to the recovery of the XAU/USD price may include the following resistance levels:
→ median line of the descending channel;
→ the level of 2012 dollars per ounce, which worked as support, but was broken on Wednesday.
Reuters writes that the price of gold XAU/USD may reach the levels of 1960-1970 to intensify interest from buyers. This is a valid scenario that may well come true if the current trend in the form of a downward channel is not broken.
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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
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