Recently, the gold market has been affected by positive U.S. economic data, leading to a decline. According to data released this month, employment and wages in December showed strong growth, and consumer prices also rose. Many economists believe that the U.S. economic condition is favorable based on this data, and there is a possibility of retracting earlier predictions of an economic downturn this year. Additionally, Federal Reserve(Fed) officials also believe that the economy is neither overheated nor too cold, undoubtedly providing them with greater flexibility in monetary policy.

After the release of the data, on one hand, it weakened investors' expectations of an early interest rate cut by the Fed, impacting the gold market to some extent. On the other hand, the high levels of U.S. bond yields and the sustained strength of the U.S. dollar further boosted the dollar and restricted the upward potential of gold. Currently, investors are closely monitoring the release of other economic data, which will provide more clues about the Fed's interest rate cut. If the data is positive, expectations for a rate cut may decrease, strengthening the downward pressure on gold; conversely, if the data falls below expectations, gold may resume an upward trend.

From a technical perspective, the gold trend is currently in a pattern of oscillation and decline, with no clear signs of a stronger rebound in gold prices. The daily chart shows that gold prices have experienced a significant decline after multiple rebounds near $2,040. Although the key support level of $2,000 has not been breached at present, bearish forces have tested this area, and various technical indicators are still in a downward trend, indicating an overall weak trend. In the short term, gold prices have fallen below the support of $2,022, and if gold falls below $2,000, it may further decline to around $1,970. However, technically, $1,970 is a previous bottom support level. If you are a medium to long-term investor optimistic about gold, you may observe whether there are rebound signals around $1,973 and buy at an appropriate time. Conversely, for bearish investors, you may want to observe selling around $2,024, with a target down to around $1,970.

Overall, it is expected that gold will continue to oscillate between $2,000 and $2,080, awaiting a clear direction. However, investors need to closely focus on U.S. economic data, Fed ‘s policies, and other factors that may affect the gold market. In the long run, as long as there are risks to the economic outlook, gold still has the potential for upward movement.

Hugo Leong

Gold Analyst of Hantec Group