Gold price rose for the second successive session on Wednesday, marginally falling short of breaching the $2,700 barrier once again. The yellow metal traded at $2,678 at the time of writing, having eased from an intraday high of $2,696.
Why Gold Could Stay on the Ascent
The market has a high affinity to gold despite the US dollar’s gains against major currencies. The DXY index, which measures the dollar’s strength against six major currencies has been oscillating near two-year highs in recent days.
The US Consumer Price Index (CPI) data for December came out soft, with the headline inflation rate staying unchanged year-over-year from November’s 2.9%. Similarly the monthly rate stagnated at 0.4%. The figures matched analysts forecasts in both cases.
However, Core CPI (excluding food and energy prices) declined by 0.1% from November’s figures and missed analysts’ forecasts by a similar margin. The annualised core CPI was at 3.2%, while the monthly figure for December was at 0.2%. These have eased concerns on overheating of US economy, adding support to a potential interest rate cut in the first quarter. That has added propulsion to gold price upside.
Elsewhere, Ukraine lauched a barrage of attacks deep inside Russia on Tuesday, in what has been described as its single-largest attack yet. On its part, Russia has vowed to respond forcefully, raising the prospect of an escallation. That could will spur up the demand for safe haven assets, which favours further gains by gold price. Looking ahead, US Initial Jobless Claims and Core Retail Sales data couls add fresh impetus to XAUUSD.
Gold Price Prediction
Gold price pivots at $2,678 and the momentum favours the continuation of the upside. The first barrier is likely to be at $2,688, beyond which the momentum could push the price higher to $2,697.
Conversely, moving below $2,678 will shift gold price momentum to the downside. If that happens, the commodity will likely find the first support at $2,671. However, a stronger downward momentum could break below that level and invalidate the upside thesis. Also, it could take the price lower and test $2,663.
The post Gold Price Headed Higher As Safe Haven Demand Heats Up appeared first in UK on InvestingCube.