- USD weakens after the release of the 4th quarter Employment Cost Index.
- The data point to a slowdown in inflation.
- XAU/USD erases daily losses with a bounce of more than $10.
gold prices rebounded strongly after the release of US labor cost data for the fourth quarter. Signs of a slowdown in inflation sent yields lower in the US and higher on Wall Street, weakening the dollar.
The Employment Cost Index (ICE) rose 1% in the fourth quarter, below the 1.1% market consensus, marking the third consecutive slowdown. Still, the index is up 4% compared to a year ago. Evidence of an improving inflation outlook boosted US yields ahead of Wednesday’s FOMC decision.
Still, the numbers are on the high side, suggesting that inflation is still not in line with the Fed’s target. “Even as supply chain pressures ease, commodity prices cool, and housing costs moderate, we think the FOMC still wants to see a bit more of a slowdown in wage growth before the Committee is confident that inflation is heading firmly to 2% over the medium term,” Wells Fargo analysts said.
The dollar fell after reporting and so did Treasuries, boosting gold. Stocks also rose and the price of crude increased. XAU/USD erased all losses and is hovering around daily highs at $1,927.
On Tuesday, gold bottomed at $1,900, critical support. Now prices are once again above the $1,920 area, another relevant technical area. If it holds above, it is expected to test $1,935.
technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
