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Gold Turns Red As Market Waits On Key US Data Releases

Gold prices have fallen in the afternoon European session, as US Treasury yields rise. Gold futures were at $2034 an ounce, after losing -0.25% at 12.20 UTC. Similarly, the commodity was down by -0.29% and trading at $2,028 at the spot market. The commodity has an eventful day lined up, as multiple macroeconomic data releases come out of the US on Thursday.

Gold is not only a safe haven asset, but also a non-confidence vote on the US economy. Therefore, Wednesday’s lower-than-expected GDP reading for the fourth quarter of 2023 (+3.2%  actual versus +3.3% projection), should ideally favour gold prices in the mid-term. However, the impending release of key US macroeconomic data has seen traders go slow on dollar selloff.

The US Initial Jobless Claims data is projected to show a spike in the number of people seeking unemployment insurance from 201,000 to 209,000. In addition, core Personal Consumption Expenditure (PCE) Price Index is expected to rise to 0.4% in January from December’s 0.2%. A rise in the jobless claims and a fall in the PCE Index relative to the forecast figures will exert downward pressure on the dollar, and vice versa.

Also, three FOMC members are scheduled to speak on Thursday afternoon, and their statements will be weighed for their implications on US interest rates. Meanwhile, XAUUSD will remain under pressure in the intervening period from the rising yields on US Treasuries. As of this writing, the indicative 5-year and 10-year bonds have seen their yields return above 4.300%, and have risen by more than 3 basis points.

Technical analysis

Gold pivots at 2031, and a break above this mark could build bullish momentum to attempt breaking the resistance at 2041. Continuation of bullish control beyond that level could see gold price test 2046. However, if the resistance persists at 2031, the commodity could attempt to break 2025. A successful breach could see the support move lower to 2020.