XAU/USD: Critical Zone – Should You Buy or Sell?

The price of gold (XAU/USD) is undergoing a significant sell-off, failing to reclaim the weekly high above $2,060. Investors are reassessing the timing at which the Federal Reserve (Fed) might reduce interest rates. After the failure to regain the weekly high of $2,062, the price of gold has dropped to around $2,030. It is expected to remain uncertain until new signals emerge regarding a potential Fed interest rate reduction. The precious metal has wiped out gains made on Monday, dipping below the 20-day Exponential Moving Average (EMA) at approximately $2,039. Further declines may occur if the gold price fails to defend the January 3 low of $2,030, exposing it to psychological support at $2,000. Investors are reacting to the persistent Consumer Price Index (CPI) report for December and hawkish comments from European Central Bank (ECB) officials. Despite expectations of a rate cut in March, Fed policymakers are in no rush to adopt an accommodative stance on interest rates, considering employment stability and the low likelihood of a recession in the United States. Going forward, data on US retail sales, industrial production, and the Fed's Beige Book will provide new insights into interest rate prospects.