Gold Price Update: Despite Friday’s Drop, Weekly Gains of 0.80%
- Gold price fell below $2,900 on Friday but is set to end the week with solid gains of over 0.80%.
- US Retail Sales decline causes US Dollar weakness and lower Treasury yields.
- Investors anticipate more than one Fed rate cut, increasing bullion’s longer-term appeal.
Despite a drop on Friday, gold prices are poised to close the week with a gain of over 0.80%. Economic data from the US was mixed, leading to a weakening Greenback and a decrease in US Treasury yields. XAU/USD is currently trading at $2,883, down 1.48% daily.
In January, US Retail Sales saw a sharp decline, impacting the US Dollar’s performance negatively. However, this provided a boost for the gold market as traders adjusted their positions ahead of potential rate cuts by the Federal Reserve.
Following the release of the data, investors priced in the possibility of multiple interest rate cuts by the Fed, leading to a drop in the US 10-year T-note yield by six basis points to 4.472%. Additionally, Industrial Production showed improvement in January after disappointing figures in the previous month.
Market Movers Summary: Gold Price, US Yields, and Economic Data
- US 10-year Treasury bond yield decreases by five basis points to 4.48%.
- US real yields drop four basis points to 2.041%, supporting XAU/USD prices.
- US Retail Sales contract by -0.9% MoM in January, below expectations.
- Industrial Production grows by 0.5% MoM in January, surpassing forecasts.
- Central banks purchased over 1,000 tons of gold in 2024, a significant increase from the previous year.
- Money market fed funds rate futures indicate potential easing by the Federal Reserve in 2025.
Technical Outlook for XAU/USD: Support and Resistance Levels
Gold prices remain in an uptrend, currently retracing from a two-day low of $2,878. The Relative Strength Index (RSI) has exited from overbought territory, suggesting a potential halt in the drop if buyers defend the $2,864 level. The first key support is at $2,850, followed by $2,790 and $2,730.
If buyers push the price above $2,900, the next resistance level is at the all-time high of $2,942. Further upside targets include $2,950 and the $3,000 milestone.
Gold FAQs: Key Information About Investing in Gold
- Gold is considered a safe-haven asset, providing a hedge against inflation and currency depreciation.
- Central banks are major holders of gold, using it to diversify reserves and strengthen their economies.
- Gold has an inverse correlation with the US Dollar and US Treasuries, making it attractive during times of economic uncertainty.
- Price movements in gold are influenced by geopolitical events, interest rates, and the strength of the US Dollar.
Analysis of the Gold Market Trends and Implications for Investors
Gold prices have shown resilience despite short-term fluctuations, indicating strong investor interest in the precious metal as a safe-haven asset. The decline in US Treasury yields and the weakening US Dollar have further boosted the appeal of gold as an alternative investment.
Investors should pay attention to the Federal Reserve’s potential rate cuts and their impact on gold prices. Central banks’ continued purchases of gold highlight its enduring value as a store of wealth. Understanding the factors influencing gold prices, such as geopolitical instability and currency movements, can help investors make informed decisions about including gold in their portfolios.
Overall, the gold market presents opportunities for diversification and protection against economic uncertainties, making it a valuable asset for long-term investors seeking stability in their portfolios.