Gold – Falls below $2,000 after resilient display this year

  • US inflation report hits gold
  • Fewer Fed rate cuts priced into markets
  • A loss of major technical support

US inflation data finally took its toll on gold which, after holding strong above $2,000 this year, finally crumbled under the pressure of higher rates.

How much worse it gets for the yellow metal will ultimately depend on how bad the data gets but, under the circumstances, we’re certainly back in a “good news is bad news” scenario ahead of the retail sales data.

The fairytale scenario of a strong economy, low inflation, and rate cuts now looks a step too far.

US inflation rose 0.3% last month and 3.1% compared to a year earlier. That’s still well above the Federal Reserve’s 2% target and the report has almost erased any possibility of a March rate cut in the markets.

Gold hits a two-month low after the CPI report

Gold fell heavily after the data as traders finally appeared to accept that rate cuts may not come as soon and as fast this year as previously assumed.

Gold Daily

Source – OANDA

The break below $2,000 may be a big psychological blow after such a long period of resilience. The next big test could fall around $1,973 where the December low aligns with the 200/233-day simple moving average band.

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Former Craig

Former Craig

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.