Gold set for potentially volatile week :: InvestMacro

• Big week ahead for gold due to risk-events

• Watch out for geopolitical developments

• Real shaker could be US CPI revisions

• Bulls back in action D1 chart

• Bloomberg model: 74% chance XAUUSD trades within the $2019.23 – $2095.58

Even as anticipation mounts ahead of the US jobs report this afternoon (Friday 2nd February), mindful investors may be keeping tab on what’s to come in the week ahead.

Key economic reports from across the world and speeches by Fed officials will be in focus. However, the real shaker could be the revised US CPI figures which have the potential to make or break expectations around rate cuts.

Monday, 5th February

• CNH: China Caixin PMI’s
• AUD: Australia MI inflation, PPI
• JPY: Japan Jibun Bank PMI’s
• EUR: Eurozone S&P Global Services PMI, PPI
• USD: US S&P Global Services PMIs, ISM

Tuesday, 6th February

• AUD: RBA rate decision
• EUR: Eurozone retail sales, Germany factory orders
• USD:  Cleveland Fed President Loretta Mester, Philadelphia Fed President Patrick Harker speech

Wednesday, 7th February

• CNH: China forex reserves
• EUR: Germany industrial production
• US30: Walt Disney earnings
• USD: Fed Governor Adriana Kugler, Richmond Fed President Tom Barkin speech

Thursday, 8th February

• CNH: China PPI, CPI
• USD: US initial jobless claims, Treasury Secretary Janet Yellen speech

Friday, 9th February

• CNH: China money supply, new yuan loans
• CAD: Canada unemployment
• EUR: Germany CPI
• USD: Revisions: CPI
• Lunar New Year’s Eve celebrations

After shedding just over 1% in January, gold prices could be ready to shine in the new month due to various fundamental forces.

Despite initially weakening on the Fed’s hawkish remarks, the precious metal bounced back thanks to falling Treasury yields and heightened geopolitical risks concerning the developments in Jordan.

Note: The incoming US jobs report this afternoon could result in heightened volatility for gold prices.

With bulls making their presence known and pressing against resistance, a potential breakout could be on the horizon.

Here are 3 factors that may rock gold:

1. US CPI revisions

Top-tier US economic data and Fed speeches are likely to influence gold prices throughout the week.

However, the gamechanger may be the US CPI revisions published on Friday.

The CPI revisions are released once every year with seasonally adjusted factors recalculated to reflect price movements from the just-completed calendar year (2023). It does not end here; this routine annual recalculation also looks at inflation for the previous 5 years. So essentially, investors will see revised figures for the period January 2019 through December 2023.

Why is this a big deal?

One of the major themes influencing financial markets last year was signs of falling inflation!

This fuelled speculation around central banks cutting interest, supporting equity markets along with gold prices as a result.

So essentially, any major revisions to the CPI could heavily influence expectations around Fed rate cuts.

• Gold prices could push higher if the CPI revisions confirm that inflation has been trending downwards.
• Any major revisions that show CPI was higher than expected, could hit gold as investors re-evaluate expectations around Fed cuts.

2. Geopolitical tensions

The negative developments concerning the United States and Iran could keep markets on edge.

Geopolitical tensions are likely to influence gold prices as investors brace for the US response to attacks on US troops in Jordon. Concerns are likely to rise over any retaliation escalating US-Iran tensions even further. This growing uncertainty and unease may stimulate appetite for safe-haven assets like gold

3. Technical forces

Gold seems to be turning bullish on the daily charts with prices trading above the 50, 100 and 200-day SMA.

• A solid breakout and daily close above $2060 may open a path to the 2024 high at $2079 and $2085.
• Should prices fail to break above $2060, this could trigger a selloff towards the 50-day SMA at $2032 and support around $2020.

Bloomberg’s FX model points to a 74% chance that XAUUSD will trade within the $2019.23 – $2095.58 range over the next one-week period.