Gold Prices Power Ahead, Will XAU/USD Break $2,000 Soon？

Gold Price (XAU/USD), Chart, and AnalysisUS dollar on the backfoot ahead of US GDP and inflation releases.Gold has rallied by over 17% in the last three months.

The outlook for gold remains positive with the precious metal continuing its multi-month move higher. A weaker US dollar, caused in part by a stronger Euro, global recessionary fears, and growing expectations that the Fed will ease back on interest rate hikes, have given gold the ideal backdrop to push back to highs last seen in Q2 2022. Gold has pushed ever higher off the triple bottom seen on the daily chart between late September and early November last year and has returned just over 17% in the last three months.

The US dollar remains weak and is currently testing multi-month support. The greenback is under pressure from a strong Euro – the Euro makes up around 57% of the DXY weighting – and expectations that the Fed will be dabbing the breaks soon on further rate hikes. The Fed is expected to hike rates by 25 basis points at both the February and March FOMC meetings and then pause before potentially trimming rates at the end of the year. The US dollar has lost 11.5% of its value since the September 28 high. Looking at the daily chart, a break below resistance may see the DXY test 100 – a big figure and psychological support - and then eye a landing area around 97.70.

US Dollar Index (DXY) – Daily Chart, January 24, 2023.

Traders should be aware of two high-importance data releases coming up later this week. The first look at US Q4 GDP will be released on Thursday at 13:30 GMT, while the Feds preferred inflation measure, core PCE will be released on Friday at 13:30 GMT. Both have the potential to move the US dollar sharply.

Gold is likely to consolidate in the short term before continuing its trend higher, especially with the two heavyweight US data releases at the back end of the week. Support starts at $1,920s before $1,900 comes into play and this level should hold. The next level of resistance sits on either side of $1,956/oz.

Gold Price Chart – Daily Chart, January 24, 2023