XAU/USD trading with a positive bias near last week’s high of $1,815 as US CPI data is seen

  • Spot gold traded with a positive bias near last week’s highs of $1,815 on Monday.
  • Analysts have been surprised by gold’s strong performance lately despite rising bond yields on central bank tightening bets.
  • The main risk this week is the US CPI data on Thursday.

Spot gold prices (XAU/USD) traded with a positive bias on Monday, with prices currently around $1,813, up around 0.3% on the day, after finding support after an earlier return to the 200-day moving average at $1,808. . For now, pre-US employment data from last Friday at around $1,815 is capping price action, but the momentum for a break to the upside appears to be there. If XAU/USD breaks above the $1,815 resistance, its clear air will rise to the $1,830 equilibrium zone, which would be the next target for the bulls.

Some analysts are surprised at gold’s ability to hold up in recent weeks, despite rising US and global bond yields on increasingly hawkish bets on central bank tightening (particularly with respect to the Fed). and the ECB). Concrete example ; despite last Thursday the ECB opening the door to rate hikes in 2022 and last Friday a strong US jobs report raising the risk of a first 50 basis point Fed hike in March, the Gold ended the week up almost 1.0%.

“Gold was a brilliant hedge last month against falling stocks and rising bond yields, adding to the positive underlying case for gold right now,” Saxo analysts said. Bank. “It’s a combination of obviously not transitory inflation…(and) another issue that we can’t really ignore is the geopolitical risks that are currently in the market with regards to Russia and Ukraine,” they continue.

Looking ahead, the main challenge for gold this week, aside from a barrage of G7 central bankers, will be the January US consumer price inflation report. Typically, an upside surprise would be associated with a drop in gold prices, as it signals a more hawkish Fed policy outlook on the horizon. Still, with investors seemingly looking for inflation protection and falling stock and bond markets, there is a chance that gold will continue to outperform, even if US inflation surprises on the upside. For reference, the year-on-year inflation rate is expected to reach 7.3% in January.

Garland K. Long