A recent report from the World Gold Council highlighted a weaker US dollar and heavy central bank buying of gold as drivers behind the recent move higher in the precious metal. Their 2023 Gold Outlook also highlighted how gold performs well during a recession with the precious metal ‘delivering positive returns in five out of the last seven recessions’. The report also emphasized gold’s positive performance 12 months after the US dollar (DXY) peaked, something that occurred in late September last year.
The daily gold chart remains positive and suggests further gains ahead. The multi-month level of resistance around $1,880/oz. has been broken, but not convincingly yet, while the recent formation of a ‘golden cross’ will boost bullish sentiment. Looking ahead, the next level of psychological resistance at $1,900/oz. will offer little in the way of a barrier for gold, leaving gold bulls looking at just under $2,000/oz. as their longer-term target.
Gold Daily Price Chart – January 11, 2023
The latest US inflation data is released on Thursday and this report will be the driver of price action in the short term. Any beat or miss from the current market forecast will steer gold going into the weekend.
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