Gold Price Forecast: XAU/USD comes within a gold flake of the $1,825 target

• Gold price bears came close but there was no cigar.
• The US data of late has been in contrary to the belief that the Fed is about to pivot.
• Investors could now be looking to diversify in uncertain times.

Gold price bears have been on a quest for the $1,825 target since the start of the month in anticipation of a long squeeze into higher time-frame breakout traders getting long at the break of $1,800 towards the end of 2022. In Thursday's Gold price action, fuelled by a resurgence in the US Dollar pertaining to a slew of inflationary US economic data, the bears moved in again and came in close to the $1,825 target, but there was no cigar. 

At the time of writing, Gold price is trading higher by some 0.3% and close to the highs of the day ($1,844.80) near $1,842 and has rallied from the session low of $1,827.62 in a typical volatile fashion.  The US Dollar is trying to claim higher grounds on the back of a fickle narrative surrounding the Federal Reserve and what the latest key data points are revealing to be sticky inflation for longer. 

US data feeds the offer in Gold price

In mixed data on Thursday, the Labor Department's Producer Price Index (PPI) leapt by 0.7% in January, which was an abrupt reversal of December's 0.2% dip and well above the 0.4% consensus. Year-over-year, the measure fell in at 6%, hotter than the 5.4% projection but a cool-down from the prior (upwardly revised) 6.5% print. The core PPI measure posted a monthly increase of 0.6%, triple the December rate, and an annual increase of 4.5% - a 20 basis point drop from the previous month.

On top of that, as if any further proof was needed after the blowout January Nonfarm Payrolls report, the jobs market data again today confirmed that the labour market is still carrying plenty of momentum. The Labor Department reported that jobless claims, for the fifth straight week, came in below the 200,000 level associated with a healthy employment churn.

A day prior, the United States Retail sales jump 3% in January, smashing expectations despite an inflation increase that might have otherwise kept consumers' hands in their pockets, highlighting the strength of the economy. On Tuesday, the annual Consumer Price Index inflation rate in the US slowed slightly to 6.4% in January from 6.5% in December, the lowest since October 2021 but above market expectations of 6.2%. Last week's Services PMI data for the prior month was impressively high also. 

All in all, the data comes in contrast to wheat the markets had been pricing in terms of the Federal Reserve. However, following all of this inflationary data, the whole yield curve rose, and markets have started to embrace a higher for longer sentiment as estimates are now rising that the Fed may continue to raise rates into the summer. 

However, the question for market watchers is how well can the economy continue to hold up, especially as rates head much higher than many originally thought. so this might have put a meanwhile bid back into the Gold price as it steers back into shorts that have built up over the last couple of days as investors seek out diversification in their portfolios.

Gold technical analysis

In the prior analysis, Gold Price Forecast: XAU/USD bears remain keen on $1,825, the chart above highlighted the prospects of a continuation to the downside with D1 and D2 shorts in the market to trigger a third day of shorts on Thursday. This is what we got, but the $1,825 level was not quite reached. 

Instead, we now have the possibility of a first green day in a series of red days and that means longs are moving in:

This could mean a correction of the downtrend is imminent which puts $1,854 on the map as a 61.8% Fibonacci retracement target. However, we have both dynamic trendline resistance and horizontal resistance to break first between the 38.2% Fibo and the 50% mean reversion levels around $1,850 accumulatively.