XAU/USD Technical Outlook – 1, Feb
Spot gold plunged on US Dollar demand, with XAU/USD bottoming at $1,900.70 a troy ounce on Tuesday. Risk aversion dominated the first half of the day, but American traders experienced new hopes and turned their back on the Greenback, pushing the bright metal into positive ground.
The catalyst for the US Dollar decline was a minor report that US Federal Reserve officials have been paying close attention to. The United States Employment Cost Index rose in the last quarter of 2022 by 1%, below the 1.1% expected and easing from 1.2% in the previous quarter. Additional signs of easing inflationary pressures boosted high-yielding stocks ahead of the US Federal Reserve monetary policy decision, reviving hopes for a soon-to-come pivot. The American central bank is widely anticipated to hike rates by 25 bps, minimizing the odds of a severe recession.
At the same time, US Treasury yields retreated from their recent highs, with the 10-year note currently offering 3.53%, down 2 bps. Meanwhile, stocks managed to change course. European indexes trimmed their early losses and settled mixed around their opening levels, while US indexes trade in the green.