GOLD: Bulls Take Control as Gold Rockets Above $2020

Gold prices started Monday’s early European session with a robust bullish candle, surging around the $2020 mark. This strong momentum comes as robust US economic data heightens expectations that the Federal Reserve (Fed) might postpone interest rate cuts. The key support level for the precious metal is currently identified at the psychological mark of $2,000. Potential market volatility is anticipated with the release of the US Core Personal Consumption Expenditures Price Index (Core PCE) for December on Friday.

US Economic Data and Consumer Sentiment:

Improvements in US consumer sentiment in January, reaching the highest level since July 2021, have contributed to the positive outlook for gold. The University of Michigan’s preliminary reading on the consumer sentiment index for January stood at 78.8, surpassing December’s figure of 69.7 and exceeding market expectations of 70.0. Upcoming economic releases, including US GDP growth numbers on Thursday and the Core PCE on Friday, are expected to impact gold prices.

Fed’s Dovish Stance:

The recent surge in US economic data suggests a potential delay in interest rate cuts by the Federal Reserve. However, the weaker-than-expected US data could convince the Fed to maintain a dovish stance, providing support for gold prices. The Core PCE release on Friday is anticipated to be a crucial factor influencing the Fed’s policy direction.

Technical Analysis:

From a technical perspective, following a rebound around the $2020 area with significant support at $2000, the gold price is observed trading inside a bullish channel. This setup signals the potential for a new bullish impulse, with traders anticipating further upward movement in the coming sessions.

Outlook:

As gold prices exhibit early-week bullish momentum, market participants are closely monitoring economic data releases and the Fed’s stance. The support at $2,000 acts as a critical level, while the technical setup suggests a favorable environment for a fresh bullish move. Traders should stay attuned to upcoming economic indicators to navigate potential market fluctuations.