Pressured By A Resilient US Economy

Gold is 0.4% higher in the Asia-Pac session, after closing 0.1% lower at $2018.52 on Friday. Haven buying is likely behind today’s strength after the attack on a Russian Oil tanker in the Red Sea late Friday and the weekend attack on US soldiers in Jordan near the border with Syria.

• On Friday, a slight appreciation in the USD and higher US treasury yields pressured bullion after Friday’s data showed a resilient US economy, which could influence the Federal Reserve’s messaging about the pace of interest-rate cuts when it hands down its decision on Wednesday. Fed speakers have been in blackout ahead of this week’s FOMC meeting.
• It was a busy US data session on Friday. Inflation data was close to expected, while spending was firmer than forecast. US Pending Home Sales were also higher than expected, printing a whopping 8.3% m/m increase vs. 2.0% estimate.
• The market is currently assigning around a 50% chance to a 25bp rate cut in March. This compares to the near 70% chance seen a couple of weeks ago. Lower interest rates are typically positive for non-interest-bearing gold.
• Friday’s dip failed to test previously established technical levels, with support at $2001.9 (Jan 17 low) and resistance at $2039.4 (Jan 19 high), according to MNI’s technicals team.