Navigating Gold Price Correction Amidst Hawkish Fed Commentary
The gold price (XAU/USD) confronts a challenging landscape as Federal Reserve (Fed) Governor Christopher Waller’s hawkish commentary intensifies, casting shadows on the potential for a gold price correction in the near term.
Challenges for Fed Policymakers Amidst Gold Price Correction
The gold price correction gains momentum, reflecting the Fed’s cautious stance in the face of persistently high US inflation. The Consumer Price Index (CPI) data for December underscores the complexities faced by Fed policymakers, raising concerns about the impact of a premature rate cut on exacerbating inflationary pressures.
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Impact of Retail Sales and Industrial Production Data on Gold Price Correction
As the gold price correction unfolds, the market’s attention turns to the upcoming release of United States Retail Sales and Industrial Production data for December. These economic indicators are pivotal in determining the trajectory of gold prices, with a stronger-than-expected Retail Sales report potentially further diminishing the likelihood of a gold price correction in the short term.
Uncertainty Fuels Downside Bias in Gold Price Correction
Amidst heightened investor uncertainty, the downside bias in the gold price correction strengthens. Christopher Waller’s hawkish remarks inject doubts into the market, questioning the likelihood of a gold price correction in March. Waller advocates for a methodical and careful approach to rate cuts, emphasizing the need for sustainable inflation return before considering corrective measures.
Market Reactions and Analyst Insights Amid Gold Price Correction
As the gold price correction gains attention, Goldman Sachs weighs in on the situation, suggesting potential delays in rate cuts or incremental adjustments starting from April. Consequently, bets supporting a gold price correction in March diminish, with the CME Fedwatch tool indicating a reduced chance for a 25-basis points rate cut. The strengthening US Dollar Index (DXY) also exerts pressure on the gold price correction, with a slight correction following a monthly high above 103.50.
Key Economic Indicators and Fed Speakers Amid Gold Price Correction
Investor focus remains on the United States Retail Sales and Industrial Production data, crucial factors influencing the ongoing gold price correction. Simultaneously, insights from key Fed speakers, including Michael Barr, Michelle Bowman, and John Williams, are expected to shed light on the central bank’s perspective, impacting the gold price correction trajectory.
Technical Analysis: Navigating Bearish Momentum and Gold Price Correction
In the realm of technical analysis, the gold price correction is evident as the precious metal descends below the 20-day Exponential Moving Average (EMA), currently around $2,036. Notably, the 50-day EMA provides interim support, navigating the gold price correction at approximately $2,017. The 14-period Relative Strength Index (RSI) hovers around 40.00, suggesting a potential cushion against further gold price correction, while a breakdown below this level may trigger additional bearish momentum.
In conclusion, the gold price correction unfolds against the backdrop of a hawkish Fed, presenting challenges and uncertainties. Economic indicators, along with key Fed communications, play pivotal roles in shaping the course of the gold price correction. Technical analysis highlights key support levels, guiding market participants through the intricacies of the ongoing gold price correction.
Amjad Mustafa, the owner and author of Keen2Know, is a highly qualified individual with strong experience in technical engineering. He is an experienced professional with a variety of business, technology, and car knowledge. His academic background prepared him for a diverse career and established him as a prominent figure at the intersection of these rapidly evolving industries.
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