Gold Steady at $1,833 – Why 1,827 is Crucial for the Uptrend

Much of the focus of market participants was on the upcoming monetary policy meeting of the Federal Reserve, which is scheduled for January 25 and 26. Investors expect the central bank to tighten policy faster than predicted last month, in an effort to tame persistently high inflation. The Fed’s expectations could provide a clear timeline for the upcoming interest rate hike, and this started weighing on gold on Friday, dragging its prices to the downside. In addition, the rise in interest rates could increase the opportunity cost of holding non-interest-bearing bullion.

Last week, gold has posted gains of about 0.8%, mainly on the back of rising tensions between Russia and Ukraine. The US and European countries have vowed to impose sanctions on Russia if they invade Ukraine. Russia has denied any such intentions, but it has also amassed a considerable force on the Ukrainian border. Western countries have expressed great concern that Russia might invade Ukraine, and they have warned that they will hurt the country economically by imposing sanctions if Russia does so. These uncertainties and potential threats of sanctions added to the risk-off market sentiment and capped any further decline in the gold prices on Friday.

Meanwhile, US Treasury Secretary Janet Yellen defended Biden’s economic record, saying she sees a path to slower inflation. She is confident that the Federal Reserve and the Biden Administration will take steps to defeat inflation over the course of 2022. She is optimistic because the COVID-19 pandemic has been brought under control. She said that rising inflation has surpassed the expectations of most economists, including herself, and it is now their responsibility to come up with ways to tackle it.

Yellen’s comments lifted some of the risk-off market sentiment and weighed on the gold prices on Friday.

Today, the precious metal, gold, is trading at the 1,832 level, with a strong bullish bias. It has violated a significant triple top resistance at 1,829, and is heading towards the next target level of 1,850. On the higher side, the XAU/USD may find the next significant resistance at the 1,865 level.