Market Overview
The price of gold (XAUUSD) has experienced a significant bounce following the release of the US Consumer Price Index (CPI) figures, which has reignited buyer interest in the precious metal. The bounce occurred at a support level of $4,878, setting the stage for a potential test of the resistance level at $5,093.
US CPI Data
Recent data indicated that the annual inflation rate in the US slowed to 2.4% in January, marking its lowest level since May. This figure is a decrease from 2.7% in the previous two months and is below the forecast of 2.5%. Despite this positive news for gold, traders do not anticipate it will lead to an imminent rate cut, with further clarity expected from the upcoming Federal Reserve minutes.
Market Sentiment and Trends
Gold and silver prices had been declining despite record inflows into exchange-traded funds (ETFs), with gold ETFs attracting $19 billion, the highest monthly inflow on record. The recent rally in gold prices is part of a broader uptrend, and despite a sharp dip in January, global demand and geopolitical tensions continue to support gold prices.
Geopolitical Factors
Ongoing global tensions, particularly in the Middle East, pose a risk to metal prices. Notably, Iran has recently shut down part of the Strait of Hormuz for military drills, a significant move not seen since the 1980s, raising concerns about potential conflicts in the region.
Future Outlook
Gold is poised for a test of resistance levels this week, and if buyer confidence remains strong, new highs could be achieved in the coming weeks as the market digests the recent lows.