Gold comfortably above $2000 ahead of key Fed speech

While gold didn’t give up all its gains on Friday, assisted by another led lower for US bond yields after a soft producer price inflation report, it was comprehensively rejected above $2058, sending it back below former downtrend resistance. The reversal mirrored what was seen earlier in the week where a similar advance fizzled. However, recent price action has been more constructive with dips below $2047.3 bought, suggesting it may help determine where gold moves from here. On the downside, support is located at $2040 and again at $2016. $2058 looms as the first upside target for longs.

With US rates markets nearing 170 basis points worth of rate cuts from the Fed this year, the threat posed to gold by a stronger US dollar and higher bond yields comes down to whether any event can pose a threat to the soft landing narrative? While we’ll receive US retail sales and University of Michigan consumer inflation expectations data this week, a speech from Fed Governor Christopher Waller on Tuesday looms as the most likely known threat. The former policy hawk turned dovish in late November, preceding the broader pivot towards rate cuts from the FOMC.