Gold price is struggling just above $2,000 as the risk-off mood extends into Thursday. US Dollar retreats with bond yields, despite Middle East geopolitical risks and easing Fed cut bets. Gold price leans bearish, with $1,975 eyed as the next crucial support.    Gold price is trying hard to find a floor just above $2,000 early Thursday, despite a broad US Dollar (USD) pullback and ongoing Middle East geopolitical tensions. Attention turns toward the mid-tier US economic data and speeches from US Federal Reserve (Fed) policymakers for fresh trading impetus. Gold price languishes near five-week lows Risk sentiment continues to remain in a weak spot, in the wake of a likelihood of no further big stimulus from China, Red Sea geopolitical tensions and easing bets for aggressive Fed rate cuts. However, the US Dollar fails to benefit from the safe-haven flows, as the US Treasury bond yields pullback from multi-week highs remains a drag. This somewhat turns in favor of Gold price, as it looks to defend the $2,000 barrier, following two straight days of sharp declines. At the time of writing, the US Dollar Index is losing 0.18% on the day to trade at 103.30, extending the retreat from five-week highs of 103.70. The benchmark 10-year US Treasury bond yields is off the highs but hold the fort above the 4.0% level. After late Tuesday's strikes by the US military in Yemen against the anti-ship ballistic missiles in a Houthi-controlled part of the country, Houthi rebels targeted a US-owned cargo ship with a kamikaze drone in the Red Sea on Wednesday after Washington said it would re-designate the Houthis to its list of "specially designated global terrorists," per BBC News. Meanwhile, strong US Retail Sales data supported the Fed policymakers' pushback against aggressive Fed rate cut expectations. Retail sales in the US increased 0.6% last month, buoyed by a pickup in clothing and accessory stores as well as online nonstore businesses. The data exceeded the market forecast for a 0.4% rise. Looking ahead, the Gold price action will likely remain driven by the Fed expectations, as investors eye the mid-tier US Jobless Claims and housing data for fresh policy hints. Also, in focus remains the speeches by the Fed officials before the Fed's 'blackout period' begins on Saturday. Geopolitical developments will also play a pivotal role, driving the broader market sentiment, eventually impacting the US Dollar and the Gold price. Gold price technical analysis: Daily chart Following Tuesday's downside break from the triangle and a sustained move below the 50-day Simple Moving Average (SMA), then at $2,021, Gold sellers flexed their muscles to test the $2,000 threshold. The 14-day Relative Strength Index (RSI) indicator remains below the midline, keeping the door ajar for more downside. If the $2,000 mark support fails, the next strong cushion is seen around the $1,975 region. But Gold buyers could find temporary support near $1,990 before that latter is challenged.   On the flip side, Gold price needs acceptance above the 50-day SMA support-turned-resistance to initiate a recovery toward the triangle support at $2,037. Further up, the confluence of the 21-day SMA and the triangle resistance at $2,045 could challenge bearish commitments. Fresh buying opportunities will generate above the latter, allowing the Gold price to retest the $2,050 psychological level.

Notes/observations - Falling equities corresponding with rising US dollar, which has been given momentum from Fed Waller hawkish commentary and geopolitical tensions in the Red Sea. - BOE rate cut expectations were also dialed down after an upside surprise to UK Dec inflation. - Abundance of ECB speakers heavily downplayed market pricing of rate cuts, uniformly chanting a similar stance. Chief Lagarde let slip that an ECB cut is likely by summer. - Overnight, China Q4 GDP and Dec Retail Sales missed expectations. Substantial weakness seen from Hang Seng and Kospi. - Asia closed lower with Hang Seng under-performing -3.7%. EU indices are -0.4% to -1.6%. US futures are -0.4% to -0.6%. Gold -0.2%, DXY 0.0%; Commodity: Brent -1.9%, WTI -2.1%, TTF -2.9%; Crypto: BTC -0.5%, ETH +0.2%. Asia - China Q4 GDP Q/Q: 1.0% v 1.1%e; Y/Y: 5.2% v 5.2%e. - China Dec Industrial Production Y/Y: 6.8% v 6.8%e. - China Dec YTD Fixed Urban Assets Y/Y: 3.0%. - China Dec YTD Property Investment Y/Y:-9.6% v -9.5%e. - China Dec Retail Sales Y/Y: 7.4% v 8.0%e. - China Dec Surveyed Jobless Rate: 5.1% v 5.0% prior; Youth Unemployment Rate (16–24-year-olds): 14.9% v 21.3% prior record level as methodology update. - China National Bureau of Statistics (NBS) reiterated stance to enhance economic vitality and prevent risks. Domestic economy faced more favorable conditions than challenges in 2024. Does face complex external environment, insufficient demand in 2024. Europe - ECB's Muller (Estonia, hawk) noted that market expectations for 2024 ECB rate cuts were aggressive. Euro zone wage growth was not in line with the inflation target. - ECB's Simkus (Lithuania) stated that was far less optimistic than markets on rate cuts, wage data was going to be very important. Americas - Fed's Waller (voter, hawk) stated that would be able to cut the policy rate this year as long as inflation did not rebound or stay high; No reason to move as quickly, to cut as rapidly as in the past; Policy path must be 'carefully calibrated, not rushed'. - US Senate stopgap funding bill said to avert govt shutdown on Saturday won enough votes to clear first procedural hurdle; Voting continues. Speakers/fixed income/FX/commodities/erratum Equities Indices [Stoxx600 -1.12% at 467.74, FTSE -1.66% at 7,432.75, DAX -0.95% at 16,414.12, CAC-40 -1.10% at 7,316.48, IBEX-35 -1.17% at 9,876.72, FTSE MIB -0.91% at 30,061.00, SMI -0.99% at 11,118.30, S&P 500 Futures -0.40%] Market focal points/key themes: European indices opened lower across the board amid broad global repricing of rate cuts expectations; sectors leading the way into the red include industrials, tech and consumer discretionary; shares of Just Eat Takeaway.com in London erased earlier gains to trade little changed following trading update; shares of shipping giant Hapag-Lloyd trade lower few percent following Maersk and COSCO comments on Red Sea disruptions; Telecom Italia shares in Milan slightly higher following Italian govt's approval of KKR's acquisition offer for its network grid; earnings expected in the upcoming US session include Charles Schwab, US Bancorp, Prologis, Citizens Financial, Discover Financial Services and Alcoa. Equities - Consumer discretionary: Just Eat Takeaway.com [JET.UK] +0.5% (trading update). - Healthcare: Pixium Vision [ALPIX.FR] +24.0% (postponement of the decision on the adoption of a sale plan). - Industrials: Hapag-Lloyd [HPAG.DE] -1.5% (operational cooperation with Maersk; COSCO and Maersk comments), Meyer Burger Technology [MBTN.CH] -28.0% (strategic alternatives), Diploma [DPLM.UK] -2.0% (trading update), Antofagasta [ANTO.UK] -3.5% (production). - Telecom: Telecom Italia [TIT.IT] +1.5% (Italian govt approves KKR's €18.8B offer to acquire its network grid), Pearson [PSON.UK] -2.5% (trading update). Speakers - ECB Chief Lagarde noted that too optimistic markets did not help ECB inflation fight; Inflation was not where ECB wanted it to be. ECB had reached peak rates barring any major shock. Watching wages, profit margins, energy and supply chains; 2nd round effects would be a cause for concerns. - ECB's Knot (Netherlands) noted that market were getting ahead of themselves on rate cuts. - ECB Villeroy (France) noted that it was premature to say when ECB would cut rates in 2024; job of monetary policy was not done yet. - ECB Vasle (Slovenia, hawk) noted that his rate expectations significantly differed to market ones; absolutely premature to expect rate cut at start of Q2 2024. - UK Chancellor of the Exchequer (Fin Min) Hunt stated that inflation did not fall in a straight line; govt plan was working and should stick with it. - EU Commission Chief Von der Leyen stated that was working on reforms to prepare for +30 EU members and to present the plans in Feb. - Sweden Central Bank (Riksbank) Breman stated that probably no need to raise interest rates further. - Hungary Central Bank Dep Gov Virag stated that had room for 100bps rate cuts at upcoming meeting. Base Rate could fall to 6.00-7.00% area by mid-2024 (**Note: currently at...

AUD/USD dropped to six-week lows near 0.6530. Mixed Chinese data releases weighed on AUD. Markets' attention now shifts to the Australian jobs report. Sellers continued to exert control during Wednesday's session, prompting a retreat of AUD/USD to the low-0.6500s, marking six-week lows. This further extends the recent breach of the critical 200-day SMA (0.6581). In light of the ongoing price action, the pair fully faded the rally seen in the second half of December, while the recent break below the 200-day SMA leaves the door wide open to further retracements in the short-term horizon. Wednesday's bearish developments around the Aussie dollar followed disheartening prints from the Chinese economy for the month of December released during early trade, where the GDP Growth Rate expanded below consensus by 5.2% in the October-December period, the Unemployment Rate ticked higher to 5.1%, Retail Sales increased less than predicted by 7.4%, and the House Price Index contracted 0.4% vs. the same month of 2022. On a brighter note, Industrial Production expanded 6.8% YoY. Adding to the persevering sour mood around the high-beta currency emerged another positive session in the greenback, which remained propped up by shrinking speculation of an interest rate cut in March.   In the meantime, market participants are anticipated to assess the forthcoming release of the labour market report in Australia on January 18 in relation to the ongoing speculation surrounding the RBA's stance at its February event. On this, market chatter around the likelihood that the RBA could keep rates unchanged next month has been underpinned by the recent lower-than-expected inflation figures in the country, as indicated by the Monthly CPI Indicator for December. AUD/USD daily chart AUD/USD short-term technical outlook The AUD/USD pair hit a new 2024 low of 0.6534 on January 17. A further decline might see the December 2023 level of 0.6525 (December 7) retested before the transitory 100-day SMA at 0.6512. Further deterioration of the outlook should cause the pair to attempt to move to the 2023 bottom of 0.6270 (October 26). If bulls take control, the focus will turn to the December 2023 high of 0.6871 (December 28), which comes before the July 2023 top of 0.6894 (July 14) and the June peak of 0.6899 (June 16), all of which are prior to the important 0.7000 mark. The negative tone appears to be exacerbated on the 4-hour chart. In fact, the breach of the year-to-date lows opens up the possibility of a move to 0.6525 and 0.6452. The MACD deepens into the negative zone, while the RSI hovers around 23, opening the door to more losses in the near term. The bullish trend, on the other hand, may face first resistance around the 200-SMA at 0.6687, followed by the 100-SMA at 0.6732, which is regarded as the final line of defense before the previous high at 0.6870. View Live Chart for the AUD/USD

Summary Today's retail sales report for December showed consumer spending picked up speed in the final month of the year. Not all the dollars spent found their way into holiday spending categories, but a surge in control group sales means upside risk for Q4 PCE forecasts. December to remember sales event For anyone thinking that the consumer was losing momentum at the end of last year, think again. Retail sales rose 0.6% in December, handily exceeding expectations. Auto sales were expected to be a key driver, and that category was indeed up 1.1% in the month, but the strength extended beyond motor vehicle sales (chart). The biggest monthly gains, in fact, were reserved for some of the categories that comprise holiday shopping. The biggest percentage gainer was department stores where cashiers rang up 3.0% more sales in December. Clothing stores tied for second place with a 1.5% increase in December. Clothing store sales were up 4.3% over the past year which means that more than a quarter of all last year's sales at clothing stores occurred in December, at least in dollar terms. Although a lot of holiday shopping took place in person this year, e-commerce still saw gains with a 1.5% increase in December, enough to tie the percentage gain at clothing stores (e-commerce is almost four times the size of clothing stores). Overall our measure of holiday sales, which includes total retail sales less sales at auto dealers, gasoline stations and restaurants, rose 0.7% in December (10.5% on a non-seasonally adjusted basis). Holiday sales were thus up nearly 4% over last year, which is slightly below our initial estimate for a 5% annual gain. As seen in the nearby chart, this puts the 2023 holiday sales season essentially in line with the pre-pandemic average. Cruising control Control group sales, which are the best read for personal spending in the GDP accounts, rose 0.8%, and these retailers saw sales revised higher in November as well (chart). Once adjusting the estimates for inflation, these data suggest modest upside to Q4 real personal spending. That is, our measure of inflation-adjusted retail sales rose at a 3.5% annualized pace in Q4, compared to an estimated 3.3% prior to today's release. This implies some upside risk to our estimate for total real personal consumption expenditures to rise 2.2% in Q4. We'll get the full personal income and spending release next week in which we'll get a cleaner read on the larger services side of consumption. Yet, with 12 full months of data, some patterns are evident in the composition of retail sales. More than any other category, the one that saw the largest gain in 2023 was bars and restaurants, which were up 11.3%. As this is the lone services category in this release, it shows that while goods spending remained resilient in 2023, there was an ongoing wallet transition back to services happening under the surface. A distant second and third place finish go to health and personal care stores (+8.5%) and ecommerce (+8.0%). Overall it appears that the staying power that has helped prop up spending over the past year remains. It may be shifting away from excess liquidity to a reliance on borrowing and real income growth, but it's intact as consumer resilience helped stave off an economic contraction. For 2024, we still anticipate a moderation in spending as most likely. As the labor market continues to moderate, we expect to see renewed pressure on real disposable income. At the same time, households' reliance on borrowing does not look like a sustainable source of purchasing power ahead. Download The Full Economic Indicator

XAU/USD Current price: 2,004.64 Resilient United States data and comments from Fed officials undermine the market mood. Stocks trade in the red for a second consecutive day, yields reach fresh multi-week highs. XAU/USD bearish momentum supports a slide below the $2,000 mark in the near term. Spot gold trades at its lowest since mid-December, as the US Dollar extends its advance as global stocks fell further. The XAU/USD pair trades near an intraday low of $2,003.28 mid US-afternoon, as investors keep reducing bets on a Federal Reserve (Fed) rate cut next March. The CME FedWatch Tool shows a 52% chance of such an event, down from roughly 70% a couple of weeks ago. Mixed United States (US) data released on Wednesday further weighed on the pair. The country reported that Retail Sales were up 0.6% MoM in December, while Industrial Production in the same month increased 0.1%, both beating expectations. Capacity Utilization rose 78.6%, below the 78.7% expected. Resilient macroeconomic data combined with hawkish words from Fed officials weighing down the odds for a March cut. Government bond yields are also on the rise, with the more sensitive 2-year Treasury note currently offering 4.36%, while the 10-year note yields 4.10%, both standing at fresh multi-week highs. Wall Street, on the other hand, extends its Tuesday slump with the three major indexes trading in the red. XAU/USD short-term technical outlook XAU/USD is down for a second consecutive session, and the daily chart shows additional declines are on the table. The pair extends its slide below a mildly bearish 20 Simple Moving Average (SMA) but holds above the 100 and 200 SMAs, both in the $1,960 region. Technical indicators, in the meantime, head sharply south within negative levels without signs of bearish exhaustion. The bearish momentum is stronger in the near term. The 4-hour chart shows XAU/USD develops below all its moving averages, slowly gaining downward traction. The 200 SMA provides dynamic resistance at around $2,037.25. Finally, technical indicators maintain the downward pressure near oversold readings, supporting a bearish breakout of the $2,000 threshold. Support levels: 2,049.15 2,037.90 2,024.50 Resistance levels: 2,062.35 2,074.40 2,087.00

EUR/USD Current price: 1.0874 Financial markets await US Retail Sales for the next directional movement. Risk mood is off amid market players recalculating bets on upcoming rate cuts. EUR/USD maintains the bearish bias, could accelerate its slump once below 1.0845. The EUR/USD pair extended Tuesday's slump to 1.0855 at the beginning of the day, slowly trimming intraday losses and currently trading flat in the 1.0870 price zone. Comments from US Federal Reserve (Fed) officials made investors hesitate about rate-cut odds, sending stocks sharply down, and Treasury yields firmly up. Asian stocks edged lower, further supporting the Greenback, as softer-than-anticipated Chinese data spurred concerns. The Gross Domestic Product posted a quarterly increase of 1% in the final quarter of 2023, while the annual comparison printed at 5.2%, below the expected 5.3%, although better than the previous 4.9%. European stocks replicate their overseas counterparts, trading in the red and weighing on Wall Street futures. In the meantime, US Treasury yields maintain their positive tone, with the 10-year note currently offering 4.07% and the 2-year note yielding 4.28%. Data-wise, the Eurozone confirmed the December Harmonized Index of Consumer Prices  (HICP) at 2.9%, while the US published  MBA Mortgage Applications for the week ended January 12, up 10.4%, up from the previous 9.9%. The country will publish December  Retail Sales and Industrial Production for the same month, while a few Fed speakers will be on the wires. EUR/USD short-term technical outlook The  EUR/USD pair is at risk of extending its slide, according to technical readings in the daily chart. The pair develops far below a mildly bearish 20 Simple Moving Average (SMA) while approaching a flat 200 SMA, providing support at 1.0845. At the same time, the Momentum indicator heads firmly south within negative levels, while the Relative Strength Index (RSI) indicator hovers around 42, without signs of downward exhaustion. Bears retain control in the near term. The 4-hour chart shows EUR/USD develops below all its moving averages, and with the 20 SMA accelerating its slide below a flat 200 SMA, reflecting sellers' strength. Finally, technical indicators grind lower near oversold readings, lacking momentum amid the limited intraday range. Support levels: 1.0845 1.0800 1.0760 Resistance levels: 1.0890 1.0940 1.0980