As of January 30, 2024, gold prices are demonstrating a stable uptrend, buoyed by recent economic data from the United States which suggests that a “soft landing” for the US economy could be on the horizon. Typically, such economic optimism might be seen as a negative for gold, a non-yielding asset, but escalating tensions in the Middle East are providing underlying support. Currently, XAU/USD (Gold/US Dollar) is trading at $2036.50, remaining steady as the Asian Wednesday session commences.
On Tuesday, gold experienced a modest increase of 0.17%, driven by a decline in US Treasury bond yields. This movement comes amid market anticipations that the Federal Reserve will hold interest rates steady in its upcoming Wednesday meeting. Investors are keenly awaiting the post-meeting press conference from Fed Chairman Jerome Powell for insights into the future monetary policy direction.
From a data perspective, December’s Job Openings and Labor Turnover Survey (JOLTS) report was notably strong, indicating a persistently tight labor market in the US. Job vacancies rose to 9.02 million, surpassing both the previous month’s figures and expectations of 8.75 million. Concurrently, the Conference Board (CB) reported a significant increase in Consumer Confidence, reaching 114.8 in January, up from 108 in December and just shy of the consensus estimate of 115.0. Dana Peterson, Chief Economist at the Conference Board, attributed this rise to factors such as slowing inflation, the prospect of lower interest rates, and robust employment conditions.
Additionally, gold’s momentum was reinforced as yields on the US 10-year Treasury bond declined by four basis points to 4.036%, which in turn exerted downward pressure on the US Dollar (USD). The US Dollar Index (DXY), which measures the dollar’s performance against a basket of currencies, witnessed a marginal decrease of 0.04%, standing at 103.41.
Looking ahead, the US economic calendar will feature key releases such as the ADP Employment Change report and the Chicago Purchasing Managers’ Index (PMI). The spotlight, however, will be on the Federal Reserve’s monetary policy decision at 19:00 GMT, followed by Chairman Jerome Powell’s press conference.
In terms of technical analysis, XAU/USD exhibits a neutral bias, but the recent crossing of the 50-day moving average has set the stage for a potential test of the $2050.00 psychological barrier. A successful breach of this level could lead to further upward movement, targeting the December 28 high of $2088.48 and possibly extending towards the $2100 mark. Conversely, a shift in market sentiment leading to a fall below the 50-day moving average at $2032.08 could trigger a downward correction towards the January 25 swing low of $2009.66.