In the latest trading session, the price of spot gold saw a modest increase, reaching a peak of $2,697.50, while dipping to a low of $2,668.51 before closing at $2,696.66. As the trading day progresses in the European market, gold continues its upward trend, hovering around the $2,704 markThis movement reflects an ongoing response to market dynamics and investor sentiment, often driven by broader economic indicators and policy expectations.

The renewed anticipation for interest rate cuts has sparked interest among traders and investors alike.

On the same night, U.S. stock markets closed significantly higher, with the Dow Jones Industrial Average posting an impressive gain of over 700 pointsThe S&P 500 index registered its largest single-day increase since November of last year, while the Nasdaq composite halted a streak of five consecutive lossesBy the end of the session, the Dow had risen by 1.65%, the Nasdaq by 2.45%, and the S&P 500 by 1.83%.

The remarkable gains in the U.S. stock market can be attributed to a combination of factors that provided a favorable environment for traders.

First and foremost, the Federal Reserve received positive data that may influence its monetary policies.

On January 15, the U.SBureau of Labor Statistics released widely anticipated economic figuresThe data revealed that the Consumer Price Index (CPI) for December 2024 increased by 2.9% year-on-year, marking the third consecutive month of rebound and reaching its highest level since July 2024, aligning with market expectationsThe previous figure had been 2.7%. Meanwhile, the core CPI, which excludes volatile food and energy prices, rose by 3.2%, slightly below the anticipated 3.3%. This core inflation figure had previously been 3.3%. The overall rebound in the CPI was largely driven by rising energy prices, while the moderation in core CPI was influenced by stable rent and durable goods price increases

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Following this data release, U.STreasury yields declined, the dollar index weakened, and equity markets rallied.

With the release of this favorable data, market expectations for continued interest rate cuts by the Federal Reserve have surgedWells Fargo has projected that the Fed will implement two rate cuts of 25 basis points each in 2025, scheduled for September and DecemberThis is a revision from their previous outlook, which had predicted three cutsAccording to the CME Group's FedWatch tool, traders are pricing in a 97.3% probability that the Fed will keep rates unchanged in January, with only a 2.7% chance of a 25 basis point cutBy March, the probability for maintaining current rates is forecasted at 72.0%, with a cumulative chance of a 25 basis point cut at 27.3%, and a mere 0.7% chance of a cumulative cut of 50 basis pointsThese numbers indicate a general consensus that the Fed may not cut rates in the short term, although the expectations for future cuts are gradually building up.

Additionally, the U.S. earnings season has brought in encouraging news for investors.

Before the market opened, major financial institutions like JPMorgan Chase, Goldman Sachs, Citigroup, Wells Fargo, and BlackRock released their latest earnings reports, which contained many pleasant surprisesJPMorgan Chase reported record net income for 2024, Goldman Sachs doubled its net profit in the fourth quarter, Wells Fargo provided better-than-expected guidance on net interest income for 2025, and BlackRock reported record client assets for the yearAlongside Citigroup’s stock hitting its highest level since the global financial crisis of 2008, the other five major banks have also recovered their stock prices to historic highs in recent monthsThis surge in performance bolstered bank stocks, with the Philadelphia Bank Index soaring over 2%, reflecting positive market sentiment towards the banking sector.

As we look ahead to today’s trading session, there are several key economic indicators scheduled for release, particularly the U.S. retail sales rate for December and the weekly initial jobless claims data

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Traders are keenly awaiting news on the month-on-month change in the December import price index as well.

On Thursday at 21:30 Beijing time, the U.SCensus Bureau is set to publish the December retail sales data.

According to authoritative media surveys, retail sales for December are projected to increase by 0.6%, a slight decline from the previous month’s increase of 0.7%.

Moreover, at the same time, the data for initial jobless claims will also be released.

It is anticipated that the number of initial jobless claims for the week ending January 11 will rise from 201,000 to 210,000.

When considering the U.S. stock market, it is worth noting that current valuations are indeed high, with most valuation metrics near historical peaksThis stretching of multiples suggests limited future expected returns, presenting significant risks to investment portfoliosHistorical data indicates that bear markets occur roughly every four yearsThe last bear market was relatively recent, having occurred in 2022, suggesting that the stock market could still yield substantial returns by 2025.

On January 16, gold market analysis indicates that from a technical perspective, both daily and 4-hour charts reveal a strong upward structure, signaling a robust bullish movement.

In terms of positioning, the primary resistance level lies near $2,720. Despite a somewhat unfavorable weekly pattern, if the price does reach this resistance area, there remains a risk of a pullback.

Currently, there is solid support at the 4-hour and daily moving averagesTheoretically, should the price retreat to the daily moving average support, it would present a buying opportunityHowever, without stability in the overall weekly trend, a cautious approach would be prudent for now, necessitating further observation before making a decision.

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