Spot gold has been on a tear in these early days of 2023, surpassing the psychologically-important $1900 mark and reaching levels not seen since early-May 2022.
The zero-yielding bullion has clearly enjoyed the tailwinds of easing headline US inflation which suggests that the Fed can afford to ease up on its rate hikes this year.
From a technical perspective, gold may push even higher should traders take their cues off the “golden cross” that formed recently (50-day simple moving average crossing above its 200-day counterpart).
Such a bullish sign may gather more bullion demand to the fore, though the $1920 may offer immediate resistance, considering how it was a key battleground between bulls and bears back in March 2022.
Gold bulls may well continue feeding off the “Fed pivot” narrative, even as they continue digesting the incoming Fedspeak in the lead up to the next FOMC meeting.
Should the Fed fail to hit back against market expectations that peak US rates is close at hand and that an eventual rate cut remains on the table, that may tempt gold bulls to hone in their sights on $2k gold.
However, should Fed officials aggressively push back against that “pivot” narrative, that should trigger some unwinding of bullion’s recent gains.