- After testing all-time high levels at $2,942 per ounce yesterday, gold prices experienced profit-taking, retreating to the support level of $2,884 per ounce early Wednesday, ahead of the US inflation data release as measured by the Consumer Price Index.
- These figures will have a direct and strong impact on the future of the US Federal Reserve's monetary policy.
Why did gold prices decline? Will gold prices rise in the coming days again?
According to recent trading on gold trading platforms, the decline in gold prices came after the US Federal Reserve signalled no urgent need for further interest rate cuts, with attention shifting to this week's key US inflation report. While gold acts as a hedge against inflation, the Fed's cautious stance reduces the attractiveness of non-yielding bullion.
However, the high prices of gold bars are still supported by the increasing demand for safe haven, as US President Trump announced a series of aggressive customs measures, with more commercial fees expected, raising fears of a commercial war. Additional support comes from the pipelines by other major central banks and the continuous purchases of gold from the central banks.
Meanwhile, geopolitical risks also provided a boost after Israel warned that it would end the ceasefire in Gaza if hostages were not returned by Saturday. At the same time, reports showed that gold leasing rates in India had doubled in a month to a record high, reflecting global market trends.
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Trading tips:
Consider that any significant decline in gold prices will be an opportunity to buy again.
US Dollar Stability Ahead of a Major Event
The US Dollar Index (DXY), which measures the US dollar against a basket of major currencies, remained relatively stable around 108 after recent selling. Overall, the markets have been cautious ahead of a crucial inflation reading that could provide further guidance on the direction of interest rates. The US consumer price index report for January is expected to show a slight acceleration in the basic inflation in the United States to 0.3 % from 0.2 % on a monthly basis, while the annual rate is expected to slow down to 3.1 % of 3.2 %.
Meanwhile, the President of the Federal Reserve, Jerome Powell, confirmed in statements to Congress, that the US Central Bank is not in a hurry to reduce interest rates, stressing the strength of the economy and continuous inflation. He warned that moving very quickly to relieve policy may hinder the progress of inflation, while moving very slowly may suffocate economic growth.
On the trade level, financial markets continued to assess the impact of the recent escalation of customs tariffs by President Donald Trump.
Gold Price Technical Analysis and Expectations Today:
Despite the recent sales, the general trend of gold prices remains up and according to the expectations of gold analysts today. Technically, prices' strength factors are still the existing and chances of bulls to return to standard upscale breaches, and psychological resistance will remain 3000 dollars for the closest ounce and do not forget that the prices have moved for a short time towards the summit 2943 dollars per ounce. Furthermore, the upcoming expectations are that any decline in gold prices may be opportunities for purchase. Also, we recommend not to risk and activate the orders to determine profit and stop loss to ensure the safety of the trading account from any sudden implications for the prices. Currently, the closest levels of support for gold prices are 2875, 2860 and 2838 dollars an ounce in a row.
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