Spot Gold (XAU/USD) Punches Higher on PCE; Resistance Breach!
PCE Data Eases in the Twelve Months to January
Today’s PCE data—a preferred measure for the Fed and one of the primary indicators they use to set monetary policy—was in line with economists' estimates across the board. Interestingly, though, for the year-over-year measures for January, both headline and core supported the disinflationary process, easing to 2.4% and 2.8% (from the prior 2.6% and 2.9%), respectively. On a monthly basis (Dec to Jan), nevertheless, headline and core rose above the prior data at 0.3% and 0.4% (from 0.2%), respectively. The year-over-year release is likely somewhat of a relief for some of the market, in view of the CPI and PPI beats we had earlier this month.
XAU/USD Resistance Finally Gave Way
Understandably, the PCE print sent US equity index futures higher (cash gapped higher at the open), while UST yields explored lower ground. Also of relevance, for those who follow FP Markets regularly, you may recall that the XAU/USD was a highlight market in the week-ahead post, and the primary message was to keep an eye on the precious metal for a breakout higher. The Research Team underlined vulnerability at daily resistance from $2,038. This was alongside Goldman Sachs forecasting that the price of gold will climb by 6.0% to $2,175 a troy ounce in the next 12 months, evidenced by demand through central bank purchases and global geopolitical tensions.
The FP Markets Research Team added that there is an undeniable uptrend in the longer term (visible on the weekly chart), and the scope to navigate higher is also seen on the weekly until resistance from between $2,075 and $2,066.
With daily resistance cleared and assuming a daily close north materialises, technical breakout buying is likely to ensue. While some may move forward and enter at tomorrow’s opening price on the back of a close higher, there will be conservative technicians potentially seeking a retest of the breached resistance as support to help filter a Bull Trap. Regardless of how one enters the market, follow-through buying has room to target the weekly resistance zone noted above between $2,075 and $2,066.
Today’s PCE data—a preferred measure for the Fed and one of the primary indicators they use to set monetary policy—was in line with economists' estimates across the board. Interestingly, though, for the year-over-year measures for January, both headline and core supported the disinflationary process, easing to 2.4% and 2.8% (from the prior 2.6% and 2.9%), respectively. On a monthly basis (Dec to Jan), nevertheless, headline and core rose above the prior data at 0.3% and 0.4% (from 0.2%), respectively. The year-over-year release is likely somewhat of a relief for some of the market, in view of the CPI and PPI beats we had earlier this month.
XAU/USD Resistance Finally Gave Way
Understandably, the PCE print sent US equity index futures higher (cash gapped higher at the open), while UST yields explored lower ground. Also of relevance, for those who follow FP Markets regularly, you may recall that the XAU/USD was a highlight market in the week-ahead post, and the primary message was to keep an eye on the precious metal for a breakout higher. The Research Team underlined vulnerability at daily resistance from $2,038. This was alongside Goldman Sachs forecasting that the price of gold will climb by 6.0% to $2,175 a troy ounce in the next 12 months, evidenced by demand through central bank purchases and global geopolitical tensions.
The FP Markets Research Team added that there is an undeniable uptrend in the longer term (visible on the weekly chart), and the scope to navigate higher is also seen on the weekly until resistance from between $2,075 and $2,066.
With daily resistance cleared and assuming a daily close north materialises, technical breakout buying is likely to ensue. While some may move forward and enter at tomorrow’s opening price on the back of a close higher, there will be conservative technicians potentially seeking a retest of the breached resistance as support to help filter a Bull Trap. Regardless of how one enters the market, follow-through buying has room to target the weekly resistance zone noted above between $2,075 and $2,066.
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