Gold price prints the first daily gains in four while reversing from monthly support line.
Market sentiment improves on upbeat China Purchasing Managers’ Indexes, International Monetary Fund growth forecasts.
Anxiety ahead of Federal Reserve monetary policy, key earnings probe XAU/USD run-up.
United States CB Consumer Confidence for January, Employment Cost Index for Q4 eyed for intraday directions.
Gold price (XAU/USD) licks its wounds around $1,925 after a three-day downtrend as market sentiment improves during early Tuesday. The reason could be linked to China’s official activity data and the upbeat growth forecasts from the International Monetary Fund (IMF). Adding strength to the optimism are the Covid headlines. However, the anxiety ahead of top-tier central bank meetings and the key earnings report probe the Gold buyers of late.
COVID-19 headlines probe Gold bears
A cautious mood ahead of this week’s bumper data joined the upbeat United States Dallas Fed manufacturing index for January, which marked the highest reading since May 2022, to favor the Gold bears the previous day. However, risk-positive headlines surrounding the Coronavirus-led restrictions from China and the US seemed to have probed the XAU/USD sellers afterward.
News suggesting US President Joe Biden’s administration’s readiness to revoke the Covid-led emergencies from May 11 appeared to have favored the risk-on profile of late. On Monday, China’s Center for Disease Control and Prevention (CDC) said, reported by Reuters, “China's current wave of COVID-19 infections is nearing an end, and there was no significant rebound in cases during the Lunar New Year holiday.”
China Purchasing Managers’ Indexes renew XAU/USD buying
Having heard the positive updates over the Covid-linked restrictions, the upbeat prints of China’s NBS Purchasing Managers’ Indexes (PMI) for January added strength to the Gold price recovery. That said, China’s NBS Manufacturing PMI rose to 50.1 versus 49.7 market forecasts and 47.0 prior whereas Non-Manufacturing PMI also came in upbeat with 54.4 figure compared to 51.0 expected and 41.6 previous readings.
International Monetary Fund’s growth forecasts add strength to Gold price
The International Monetary Fund (IMF) recently raised its global growth estimates while saying that the emerging markets' growth slowdown bottomed out in 2022. The global lender also stated that estimates come with the backdrop of a slight increase in the 2023 global growth outlook helped by "surprisingly resilient" demand in the United States and Europe, an easing of energy costs and the reopening of China's economy after Beijing abandoned its strict COVID-19 restrictions.
Second-tier United States data to probe US Dollar bulls amid sluggish yields
In addition to the aforementioned risk-positive catalysts, the lack of hawkish concerns in the market also weighs on the United States Treasury bond yields and the US Dollar, which in turn probe the Gold sellers. That said, the US 10-year Treasury yields struggle to extend a three-day uptrend near 3.54% while the US Dollar Index (DXY) retreats to 102.20 at the latest.
That said, the US fourth-quarter (Q4) Employment Cost Index (ECI) and the Conference Board’s Consumer Confidence gauge for January will be eyed for immediate directions. As per the market consensus, the US Consumer sentiment gauge may improve but a likely softer print of the US ECI, to 1.1% from 1.2%, could strengthen the dovish bias surrounding Fed and can recall the XAU/USD buyers.
It should, however, be noted that the cautious mood ahead of the earnings reports from the equity heavyweights like Amazon, Alphabet, Apple and Meta also could challenge the market’s optimism and the Gold price.
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