Gold prices little changed after bad data and hawkish talk

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There was plenty of US economic data to digest, retail sales month-on-month (m/m) for December contracting again by a larger 1.1% with its core down by the same amount, industrial production m/m in reverse with a -0.7% print with capacity utilization dropping to 78.8%, business inventories for the month prior rising as expected to 0.4%, with the positive on the inflation front producer prices -0.5% m/m and dropping from 7.3% to 6.2% year-on-year (y/y).

As for housing data, weekly mortgage applications were up 27.9% in a rare reading, and NAHB's housing market index finally managed to improve after successive drops but remained well below 50 at 35.

urther fears of a recession and ongoing hawkish central bank talk translated into a risk-off move in the financial market as key indices ended slightly lower and bonds rose. That meant Treasury yields finished the session clearly lower, so too in real terms and notably for the 10-year, at fresh recent lows for breakeven inflation rates, and the CME's FedWatch erasing expectations of a 50bp (basis point) rate hike out of the Federal Reserve (Fed) in February to almost zero (and hence little doubt left it'll be 25bp).

As for central bank speak, the Fed's Bullard remained against stalling wanting to get above 5% "as quickly as we can", Mester that "things are moving in the right direction" but “we need to keep going”, Logan on a slower pace, and Harker reiterating 25bp.
Vice Chair Brainard is expected to speak tonight, and we get more housing data on offer today with building permits and housing starts, Philly Fed manufacturing after Empire’s worsening print last Tuesday, and earnings from both Procter & Gamble and Netflix.

Gold Technical analysis, overview, strategies, and levels

Prices were just above its previous 1st Support level when yesterday’s report was released, and since then made a run past its previous 1st Resistance level's S/L (stop loss) stopping out contrarian sell-after-reversals with a bit on offer for conformist buy-breakouts before reversing to near its previous Relative Starting Point. And while volatility hasn't quite lived up to technical expectations, the overview hasn't shifted in neither daily nor weekly time frames.

IG client* and CoT** sentiment for Gold

Retail trader buy bias has risen since yesterday as the price drop entices fresh shorts initiated at the highs into closing out, from 57% to 59% as of this morning. In silver it’s a heavy long 72%, and extreme buy 86% for platinum.

CoT speculators as per last Friday’s release are also majority long in gold and in heavy territory at 72%, higher than CoT silver at 67%, but beneath CoT platinum shy of the extremes at 77%. For palladium, it’s an opposite heavy sell 69%.

Gold chart with retail and institutional sentiment

*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am for the outer circle. Inner circle is from the previous trading day.

**CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior.