The precious metal is down 1.5% on the month in a rather poor start to January trading this year. The retreat sees gold back away from key weekly resistance around the 2020 highs at $2,073 but price is not falling off a cliff just yet. Here’s a look at the technical picture at the moment:
Gold (XAU/USD) daily chart
While sellers are staying in control in the near-term, there is yet to be a bigger test of key support levels for now. The trendline support from the November and December lows is seen at around $2,008 and we haven’t gotten to that yet, let alone a test of the $2,000 mark.
So, the downside pressure is not exactly overwhelming as of yet. Adding to that, there is also a crossover from the daily moving averages with the 100-day moving average (red line) now inching past the200-day moving average (red line). That typically is a bullish signal, so it is something for traders to work with as well.
That being said, whatever technical argument you may have for gold, will still come down to what the US CPI data has to say tomorrow. In that sense, it is a bit of a double-edged sword for the precious metal.
A softer set of inflation numbers from the US tomorrow could see gold rally alongside risk assets as bond yields retreat. But on the flip side, a stronger set of inflation numbers will see a repeat of last week’s price action. And that is likely to bring gold down towards the key support regions outlined above.