GOLD:retreats towards $1,860 amid US inflation woes
The gold price (XAU/USD) remains depressed around $1,860 as sour sentiment underpins the US Dollar's early Monday rebound. Fears about US-China relations, as well as anxiety about the US Consumer Price Index (CPI) for January, could also put downward pressure on the XAU/USD.
While expressing the mood, the S&P 500 Futures faded the previous day's corrective bounce off a one-week low, falling 0.35% to around 4,080 at the most recent close, while US 10-year Treasury yields remained sidelined near 3.73% after regaining a five-week high on Friday.
It should be noted that fears about the mysterious objects flying over the United States and China have recently weighed on sentiment, even as the US General dismissed allegations against Beijing. The US General dismissed the market's fears of Chinese spying on the US and the likely rush to safe havens, saying, "(We) have no reason to believe the latest objects are Chinese." Nonetheless, the fact that the US shot down nearly four such objects while China prepares to launch one keeps the issue on the geopolitical agenda and raises the risk profile.
In other news, Philadelphia Federal Reserve President Patrick Harker delayed talk of a Fed rate cut in 2023. However, the policymaker did state that the "Fed is unlikely to cut this year but may be able to in 2024 if inflation begins to fall." His remarks mostly echoed Fed Chair Jerome Powell's cautious optimism, challenging US Dollar buyers.
However, the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) remain firmer around the monthly highs, supporting the hawkish Fed bias, which favors the US Dollar and puts downward pressure on the gold price.
Moving forward, gold traders may see further declines, but the pace may be slow ahead of Tuesday's US CPI. If the US inflation data comes in higher than expected, hawkish Fed concerns could drown out the XAU/USD price. Alternatively, softer US CPI may rekindle policy pivot talks, causing the gold price to rise.
While expressing the mood, the S&P 500 Futures faded the previous day's corrective bounce off a one-week low, falling 0.35% to around 4,080 at the most recent close, while US 10-year Treasury yields remained sidelined near 3.73% after regaining a five-week high on Friday.
It should be noted that fears about the mysterious objects flying over the United States and China have recently weighed on sentiment, even as the US General dismissed allegations against Beijing. The US General dismissed the market's fears of Chinese spying on the US and the likely rush to safe havens, saying, "(We) have no reason to believe the latest objects are Chinese." Nonetheless, the fact that the US shot down nearly four such objects while China prepares to launch one keeps the issue on the geopolitical agenda and raises the risk profile.
In other news, Philadelphia Federal Reserve President Patrick Harker delayed talk of a Fed rate cut in 2023. However, the policymaker did state that the "Fed is unlikely to cut this year but may be able to in 2024 if inflation begins to fall." His remarks mostly echoed Fed Chair Jerome Powell's cautious optimism, challenging US Dollar buyers.
However, the 10-year and 5-year breakeven inflation rates from the St. Louis Federal Reserve (FRED) remain firmer around the monthly highs, supporting the hawkish Fed bias, which favors the US Dollar and puts downward pressure on the gold price.
Moving forward, gold traders may see further declines, but the pace may be slow ahead of Tuesday's US CPI. If the US inflation data comes in higher than expected, hawkish Fed concerns could drown out the XAU/USD price. Alternatively, softer US CPI may rekindle policy pivot talks, causing the gold price to rise.
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