Will gold bulls get a Valentine’s Day gift?

Last week, we asked the question: “Will US jobs report drag gold below $1900?”

Sure enough, that freakishly hot US nonfarm payrolls print translated into a surge for the US dollar, which dragged the precious metal lower.

At the time of writing, gold is experiencing some volatility ahead of the weekend, apparently resulting from knee-jerk reactions in USDJPY due to reports of the incoming Bank of Japan Governor being initially perceived as more hawkish than other leading candidates.

Spot prices are currently testing immediate support at its 50-day simple moving average, though the precious metal can’t yet make up its mind whether to end the week in positive or negative territory.

The incoming US inflation data due on Valentine’s Day is set to be the next major catalyst for gold.

If the CPI print comes in higher than the market-forecasted 6.2%, that could force the Fed to keep hiking benchmark rates past the expected 5.15% peak.

Fresh evidence that US inflation remains stubbornly elevated should prompt bullion to further unwind its year-to-date gains.

However, if January’s CPI registers substantially lower than the estimated 6.2%, signalling that the Fed’s 450bps in rate hikes in this cycle are having the intended effect of dampening inflation, that may offer further relief for gold and perhaps even push prices back above $1900.