Gold failed to make a decisive move in either direction. $2,020 aligns as first near-term technical support for XAU/USD. January inflation data will be featured in the US economic docket next week. Gold struggled to gather directional momentum and closed the week with marginal losses. Investors will scrutinize the January inflation data from the US next week and pay close attention to technical developments for a directional clue. Gold price fluctuated in a relatively narrow channel this week In a televised interview with CBS News's 60 Minutes on Sunday, Federal Reserve (Fed) Chairman Powell repeated that the March policy meeting was likely too soon to have the confidence to start cutting rates. He also reiterated that they could move sooner if they saw labor market weakness or inflation coming down persuasively. The benchmark 10-year US Treasury Note yield extended the rally that was fuelled by the impressive jobs report and rose more than 3% on Monday, causing Gold to end the day in negative territory near $2,020. In the absence of high-tier macroeconomic data releases and fundamental drivers, the US Dollar Index corrected lower alongside the US yields, allowing XAU/USD to stage a modest rebound. Meanwhile, Qatar, acting as a mediator, said that Hamas had given a "generally positive" response to a proposed truce deal with Israel late Tuesday. This headline, however, failed to ease concerns over a deepening crisis in the Middle East, as an Israeli official told Israel's Channel 13 that some of the demands made by Hamas in the counterproposal were entirely unacceptable. On Wednesday, risk flows started to dominate the action in financial markets as the S&P 500 Index hit a new record high after the opening bell. Although the improving risk mood made it difficult for the USD to find demand, XAU/USD failed to gather bullish momentum. Later in the American session, the 10-year US T-bond yield climbed above 4.1% after the high-yield at the latest 10-year Treasury Note auction came in at 4.09%, forcing Gold to erase earlier gains. The US Department of Labor reported on Thursday that there were 218,000 Initial Jobless Claims in the week ending February 3, down from the previous week's revised 227,000. The USD held resilient against its rivals and Gold struggled to regain its traction. In the meantime, Richmond Fed President Thomas Barkin told Bloomberg that they have time to be patient on rate changes and said that he needs to see good inflation numbers being sustained and broadening. On Friday, the US Bureau of Labor Statistics (BLS) announced that it revised the monthly Consumer Price Index (CPI) increase for December lower to 0.2% from 0.3%. The Core CPI was unrevised at 0.3% for the same period. Gold edged slightly lower in the American session as the 10-year US yield continued to stretch higher ahead of the weekend. Gold price could react to US inflation data, technical developments The BLS will release January inflation data on Tuesday. On a monthly basis, the CPI and the core CPI, which excludes volatile food and energy prices, are forecast to rise 0.2% and 0.3%, respectively. It will take a significant downward surprise in monthly CPI readings, at or below 0%, for market participants to reconsider the probability of a Fed rate cut in March. In this scenario, the 10-year US T-bond yield could retreat below 4% and help XAU/USD gather bullish momentum. According to the CME FedWatch Tool, the odds of the US central bank maintaining the policy rate unchanged at the next policy meeting is 82.5%. The market positioning suggests that the USD doesn't have a lot of room left on the upside in case CPI prints come in above market forecasts. Nevertheless, a hot inflation report could support US yields and make it difficult for Gold to gain traction. On Thursday, the Retail Sales report for January will be featured in the US economic docket. This data is not adjusted for price changes and it's unlikely to trigger a significant market reaction.  Ahead of the weekend, the Producer Price Index (PPI) data for January and the University of Michigan's preliminary Consumer Sentiment Index data for February will be watched by market participants.  In summary, unless the US inflation report meaningfully alters the market pricing of the Fed rate outlook, investors are unlikely to take large positions based on next week's data releases. Instead, they might keep a close eye on technical developments for near-term trading opportunities. Gold technical outlook The Relative Strength Index (RSI) indicator on the daily chart moves sideways near 50 and XAU/USD struggles to pull away from the 20-day Simple Moving Average (SMA), reflecting the lack of directional momentum. On the downside, $2,020 (Fibonacci 23.6% retracement of the latest uptrend) aligns as first support before $2,000 (psychological level, static level) and $1,990 (100-day SMA). On the other...

EUR/USD fluctuates in a tight channel below 1.0800 on Friday. Hawkish comments from ECB officials help the Euro limit its losses. The pair needs to break out of the 1.0700-1.0800 range to find direction. Following a two-day rebound, EUR/USD failed to preserve its bullish momentum and closed virtually unchanged on Thursday. The pair continues to move sideways below 1.0800 as investors' search for fresh catalysts continues. The US Dollar (USD) outperformed its rivals in on Thursday as the benchmark 10-year US Treasury bond yield stretched higher after the Department of Labor reported that there were 218,000 Initial Jobless Claims in the week ending February 3, down from 227,000 in the previous week. Nevertheless, the currency struggled to gather further strength and helped EUR/USD limits its losses as Wall Street's main indexes held steady. Meanwhile, cautious comments from European Central Bank (ECB) officials on the timing of a policy pivot seem to be further supporting the Euro. ECB policymaker Martins Kazaks said that he was not optimistic for a rate cut in Spring and Governing Council Member Francois Villeroy de Galhau noted on Friday that the central bank will probably cut rates this year. Similarly, policymaker Pierre Wunsch said on Thursday that there is value in waiting to get more comforting wage data before taking policy action.

The strong demand for the US 30-year bond auction, that followed two other strong 3 and 10 year auctions this week triggered no appetite across the US bonds space yesterday, most probably because the 30-year paper is a long maturity paper and is mostly purchased by insurance and pension funds. But the week has been successful for the US Treasury department which saw a solid demand for its debt this week, and that's thanks to the expectation that the rates will fall – sometime this year – and that the Treasury will also slow down the pace of purchases moving forward. Appetite in risk assets remains robust. The S&P500 index shortly traded at the 5000 psychological mark before closing a few points below this level. The rally is not only fueled by rate cut expectations and AI speculation but is also backed – to some extent – by encouraging tech earnings from the stars of the league. Note that Apple, Microsoft, Alphabet, Amazon and Meta generated nearly $140bn cash from their operations last quarter. That was the highest on record. CPI revisions The Bureau of Statistics will release the CPI revisions today, which consists of the revised month-over-month CPI figures for the past five years, incorporating some adjustments. What's important to know is that the non-seasonally adjusted data remains unchanged, hence the year-over-year figures for the entire year will remain the same. Why do people care? Normally, they don't, because these changes are small and don't change the end result. But last year, the markets cared because the revisions were more significant than usual and resulted in lower adjusted m-o-m inflation numbers for the first half and higher revisions for the second half – a hint that the moderation in inflation was not as good as thought in the second half of 2022. The latter boosted the Federal Reserve (Fed) rate hike expectations and fueled the US 2-year yield. Today's revisions could reveal if the downtrending US inflation numbers hide a more significant slowdown, or a late pick up. If the revisions hint at a slowing momentum in monthly inflation figures, the Fed doves should come back in charge and the dollar should eas. If the monthly revisions warn that inflation may not be slowing as fast as we think, the Fed doves will further retreat, and the dollar should gain. And if there are no major revisions, well all eyes will turn to next Tuesday, regular CPI update. And so goes life. FX and energy The US dollar struggles to gain further momentum above the 100-DMA. But the US economy's positive divergence from the rest of the developed nations, its healthy jobs market, its decent fiscal spending are supporting the idea that the Fed is – maybe – not the best candidate to begin the pivot dance. The European Central Bank (ECB) for example is in a better position to start cutting its interest rates to prop up its depressed economies. That idea keeps the EURUSD offered near its own 100-DMA – which stands near 1.0780. Trend and momentum indicators remain comfortable negative and supportive of a deeper downside move in the EURUSD. Today, the German inflation data is expected to confirm a slowdown below the 3% in January – that should help the bears stay in charge. Elsewhere, the yen bulls are feeling the heat of a totally unexpected return to nearly 150 level at the start of this year. The USDJPY is now trading above the 149 level, and the BoJ hawks are giving in to the expectation that the Japs won't move soon or quick enough to make 2024 the year of the yen. The USDJPY's positive trend becomes increasingly vulnerable to verbal intervention as we approach the 150 level. In energy, we see a second positive attempt above the $76pb level, despite a 5.5-mio barrel build in the US inventories. The rising geopolitical tensions, strong US growth, and Chinese stimulus remain supportive for another attempt above the 200-DMA – near $77.50pb.

Dovish BoJ weakens JPY, AUD slumps on China fears Summary Better-than-expected Initial US Unemployment Claims, easing to 218,000 from 227,000 previously lifted bond yields and the Dollar. A popular gauge of the Greenback's value against a basket of 6 major currencies, the Dollar Index (DXY) pushed up to 104.15 (104.00). US treasury yields rallied with the 10-year finishing up 5 basis points to 4.17%. The two-year US treasury rate rose to 4.45% from 4.42%. In contrast, Japan's 10-year yield fell to 0.69% (0.72%). The US Dollar soared 0.9% to 149.37 Yen from 147.97 previously. Bank of Japan Deputy Governor Uchida said that the central bank was unlikely to raise interest rates aggressively. Richmond Fed President Tom Barkin said that it's a good idea that the US central bank take its time with interest rate cuts given all the uncertainty on where the US economy is headed. China's Consumer Prices slumped 0.8% in January from a year ago, the largest drop since 2009. The USD/CNH gained to 7.2150 from 7.2050. Chinese authorities were expected to stabilize the currency and prop up the economy. The Australian Dollar (AUD/USD) often seen as the FX proxy for China, slumped 0.51% to 0.6485 (0.6527).  The Aussie soared to 0.6532 after the RBA held rates steady but warned that a further interest rate hike is possible due to persistent high inflation. Sterling (GBP/USD) dipped 0.15% to 1.2615 from 1.2630 while the Euro (EUR/USD) eased to 1.0773 (1.0780). Germany's Annual Inflation released later today, is expected to steady at 3%. Against the Asian and Emerging Market Currencies, the Greenback finished mostly higher. The USD/SGD pair (USD-Singapore) grinded up to 1.3475 (1.3460). USD/THB (Dollar-Thai Baht) climbed to 35.88 from 35.60 previously. Wall Street stocks reversed earlier losses to finish with modest gains. The DOW was last at 38,715 from 38,705 while the S&P 500 steadied to 4,999 from 4,995. Other global shares rose. Other economic data released yesterday saw Australia's December Building Permits tumble to -9.5%, matching forecasts, but lower than the previous 0.3%. Japan's Economy Watchers Current Index Survey Outlook in January rose to 52.5 from 50.4 previously. AUD/USD – Against broad-based US Dollar strength and the slump in China's CPI, the Aussie was belted to 0.6480, the support level overnight. The Australian Dollar opened in Asia yesterday at 0.6527. Overnight high traded for the Aussie was at 0.6532. EUR/USD – The shared currency dipped modestly against the US Dollar to 1.0773 from 1.0780 yesterday. Overnight the Euro traded to a high at 1.0789 before easing. The overnight low recorded was 1.0741 in subdued trade. USD/JPY – The Greenback soared against the weaker Japanese Yen to 149.48 overnight highs. Broad-based US Dollar strength and a widening yield gap between the two currencies influenced trading. The overnight low recorded was 147.13 in choppy trade. GBP/USD – The British Pound eased modestly against the overall stronger US Dollar to finish at 1.2615 against 1.2630 previously. Sterling saw an overnight high at 1.2639. The overnight low recorded for the British currency was at 1.2572. On the lookout Today's economic calendar sees light data releases. Asian markets will be quiet in anticipation of the Lunar New Year which kicks off over the weekend. Germany kicks off Europe with its January Final Inflation Rate (m/m f/c 0.2% from 0.1%; y/y f/c 3.1% from 3.8% - ACY Finlogix). Italy follows with its January Industrial Production (m/m f/c 0.9% from -1.5%; y/y f/c -2.2% from -3.1% - ACY Finlogix). China releases its January New Loans (no f/c, previous was +CNY 1,107 billion -FX Street). Canada starts off North America with its January Employment Change (f/c 15K from 0.1K – ACY Finlogix), Canadian January Unemployment Rate (f/c 5.9% from 5.8% - ACY Finlogix) and Canada's January Participation Rate (f/c 65.3% from 65.4% - ACY Finlogix). Trading perspective The higher finish in US bond yields will continue to be Dollar supportive. While other global rates were also up, the Greenback maintains its yield advantage. The US 10-year bond rate climbed to 4.17%. Germany's 10-year Bund yield was last at 2.35% (2.31% previously). Being a Friday, traders can expect adjustments and profit taking to limit the Dollar's topside. Look for consolidation today with the Greenback maintaining its overall bid. AUD/USD – The Aussie Battler remained under pressure against the Greenback, breaking its support at 0.65 cents to finish at 0.6487. Look for immediate support today at 0.6480 (overnight low). The price action suggests strong bids at the 0.6480 level. The next support level comes in at 0.6450. Immediate resistance is found at 0.6540 and 0.6570. Look for a choppy trading session today, likely between 0.6470-0.6570. USD/JPY – The Greenback stayed bid against the Japanese Yen given a widening yield differential between the two currencies. Look for immediate resistance today at 149.50 (overnight high traded was 149.48). The...

The US blue chip index has not quite reached the 5,000 level at the time of writing, it is a mere 5 points away, but it seems inevitable that this key psychological level could be coming. The question now is what happens after this level is potentially breached? There is a bit of market nervousness around the 5,000 level and the index is fluctuating ahead of this level. The S&P 500 has rallied by more than 4.68% so far this year, easily outpacing European shares, and even performing better than the Nikkei on a  YTD basis, so some fatigue around this key level is to be expected. Earnings help to justify US stock market rally There has been good news regarding earnings. After a weak start to Q4 earnings season, largely because bank earnings disappointed, the outlook has brightened. There have been some notable outperformances from big oil, Disney, the tech giants and consumer discretionary like Uber, which has pushed Q4 earnings on aggregate for the S&P 500 into positive territory for last quarter. The earnings beat is widespread, which supports the rally in US stocks broadening beyond tech. However, while earnings reports are pulling their weight when it comes to boosting the S&P 500. However, there are some risk factors, including regional banks and their exposure to commercial property, Treasury auctions and Fed speak. Beware Fed speak and the policy risk premium There is a huge amount of Fed speak this week, and at this point in the monetary policy cycle – when we are on the precipice of change – it is incredibly important. The market learns of the Fed's beliefs through policy speeches, and there are lots of those, especially from the Fed. Financial markets respond directly, not only to policy actions, but also in anticipation of them and through what they learn from speeches. More Fed speakers urge caution on rate cuts On Thursday, it was the turn of the head of the Richmond Fed, Tom Barkin, who said that regional bank lenders' problems in commercial real estate won't be enough to get the Fed to cut rates early. He also said that unless the economy turns south, the Fed won't be jumping in with rate cuts. This has weighed on bond prices and has pushed up bond yields, the 10-year Treasury yield is higher by 3 basis points so far on Thursday. The market is still pricing in just under 5 rate cuts from the Fed, with the first cut still expected to come in May. However, this seems at odds with the fairly hawkish rhetoric that we have heard from Fed members this week. When the market disagrees with the Fed, it increases the chance of the 'policy risk premium'. So, as we near a critical level in the S&P 500, the policy risk premium is increasing, and this is a risk for future gains in the S&P 500. Interestingly, the Bloomberg Fed Speak Index, which uses AI to assess news headlines from Fed speakers, is still in dovish territory and is the most dovish since 2021. This is to be expected, as the Fed has said that they will cut rates this year. But we would point out that the US economy is posting positive economic surprises, and the Citi Economic Surprise Index is at its highest level since November 2023. Added to this, the Atlanta Fed GDPNow index is predicting Q1 growth of 4.2%, this is higher than the 3% estimate in January, and suggests that the pace of US growth is picking up and not slowing down as we move into the middle of Q1. This could cause Fed members to sound more hawkish, and we will be watching this index as we move forward. Treasury auctions get bigger, but demand is strong for now Elsewhere, there are some large US Treasury auctions coming up on Thursday, including $25bn of 30-year bonds. This is the largest amount in more than 2 years, however the market has been able to absorb hefty Treasury supply so far this week, so there is not much concern about the 30-year auction. On Wednesday, the US Treasury auctioned $42bn of 10-year bonds, which was a record size for a 10-year auction. However, the yield was lower than expected and demand was solid. With the Fed still expected to cut rates this year, the outlook for longer dated Treasury auctions remains strong, and we don't see them as a risk factor for the market right now, even if the size of some of the auctions is eye watering. Watch out for US CPI revisions Economic data risk will increase from this Friday. The seasonally adjusted CPI revisions for the US are released on Friday and actual CPI for January is released next Tuesday. The revisions are worth...

Gold price keeps its range play intact near $2,040, with US CPI revisions eyed. Cautious optimism and negative US Treasury bond yields cap the US Dollar rebound Gold price stays hopeful while th $2,035-$2,030 support holds. RSI defends the midline. Gold price is treading water while defending the $2,030 level in Friday's Asian trading. Investors trade with cautious optimism ahead of the US Consumer Price Index (CPI) revisions, which could have a significant influence on the Federal Reserve's (Fed) interest rates outlook, eventually impacting the US Dollar (USD) and the interest-rate-sensitive Gold price. Gold price remains at the mercy of US inflation data Ahead of next week's January CPI inflation report from the United States, all eyes remain on Friday's seasonally adjusted CPI revisions. The revisions are likely to emerge as the key event risks in Friday's trading, as they will help markets reprice the Fed rate cut expectations. The data will be closely scrutinized by the Fed for affirming the disinflation trend. A large upward revision to US CPI data, a year ago, triggered a big US Dollar reaction. Therefore, Gold traders are preferring to stay on the sidelines, refraining from placing any fresh directional bets on the bright metal. Additionally, Gold price is digesting the recent hawkish Fed commentary that pushed back against early rate cut bets, keeping the upside attempts in check. Richmond Fed President Thomas Barkin said Thursday that they have time to be patient on rate changes and said that he needs to see good inflation numbers being sustained and broadening. Meanwhile, another strong US government bond auction on Thursday drove the US Treasury bond yields higher across the curve, inspiring Gold sellers to retain control. However, early Friday, US Treasury bond yields came under renewed selling pressure, as fresh US-China trade tensions seem to weigh on risk sentiment while allowing Gold price to find a floor. Citing people familiar with the matter, Bloomberg reported that the Biden administration is considering an import ban on Chinese 'smart cars' and related components, in the face of mounting US concerns about data security. Looking ahead, Gold price will likely remain at the mercy of the broader market sentiment, US CPI revisions and upcoming speeches from Fed policymakers. However, the end-of-the-week flows and repositioning ahead of next Tuesday's US inflation report could trigger sharp moves in the Gold price. Gold price technical analysis: Daily chart The near-term technical outlook for Gold price remains more or less the same, with rangebound movement likely to extend before the US CPI revisions drop.   Gold price extends its struggle with the $2,030-$2,035 region. That level is the confluence of the 21-day and 50-day Simple Moving Averages (SMA). The 14-day Relative Strength Index (RSI) is trading listlessly just at the 50 level, justifying the side-trend in Gold price. Should the $2,030-$2,035 demand area guard the downside, the immediate powerful resistance for Gold price is seen at the $2,040 round level. Acceptance above the latter is needed to take on the $2,050 psychological level. The next critical resistance is envisioned at around $2,065. On the flipside, Gold sellers yearn for a daily close  below the abovementioned $2,035-$2,030 area. A breach of the last will put the $2,000 threshold at risk if the $2,010 round figure gives way.