Spot of gold prices jumped by 0.3% to $1,909.49 an ounce. Besides that, the gold futures rose by 0.2% to $1,910.50, as a result of a weaker United States Dollar. 

When this news was written on Thursday (19/January) evening, XAU/USD jumped by 0.85% to $1,919.84. That was happened in a sideways course at a one-week high.

The U.S. dollar is Getting weaker after the retail Sales data in that country released yesterday was further seen as disappointing. The decline reached -1.1% for month over month in December 2022. 

The November data for the period was also revised down from -0.6% to -1.0%. This means that United States citizens' spending interest is sluggish and the threat of a recession is expected to approach. 

The Fed may Slow Down Their Ongoing Rate Hike

In the midst of this kind of situation, gold will be the most sought-after safe-haven asset. Ricardo Evangelista of ActivTrades is watching a buy of safe assets (to gold) after disappointing US economic data yesterday. 

The data had a negative impact on investor sentiment, on the contrary, it was beneficial for gold. This dynamic also reinforces the narrative that the Fed will now be more likely to slow down ongoing rate hikes.

Furthermore, this created a fall in the dollar. Again positive for gold as the analyst added. Currently, 89.6% of market surveys predict that the Fed will only raise interest rates by 25 basis points in February. 

The slowing pace of rising inflation paved the way for gold to continue its rally ahead of the USD. Meanwhile, the speeches of Fed officials are also a concern. 

Federal Reserve is Still Hawkish

Philadelphia region Fed President, Patrick Harker, and Dallas Fed President, Lorie Logan, both showed statements supporting a slowdown in rate hikes. 

In addition to these two people, the Fed is still on a hawkish stance. According to indepen analyst Ross Norman, mixed messages from statements by Federal Reserve officials hinted something. 

The hints are that gold should fight hard to break through the $1,920 level. That level will probably be the next overbought level of gold price.

Elsewhere, the euro continued to perform well, buoyed by expectations of a rate hike for the next policy meeting of the European Central Bank (ECB). 

When the news was written in the middle of Thursday's European session (19/January), EUR/USD advanced to a nine-month high. EUR/GBP also rebounds from one-month low record. 

Lagarde’s Plan Triggers a Controversy 

President Christine Lagarde last December had revealed an intention to raise interest rates by 50 basis points in the next few ECB meetings. The intention provoked controversy.

That is why; some market participants doubted its realization. Bloomberg also reported rumours that the ECB might only raise interest rates by 25 basis points in March.

It was especially after raising 50 basis points in February. Rumours from the unnamed source hit the euro rate earlier in the week. However, ECB officials immediately voiced a rebuttal to the rumors and revived the euro rate. 

Klaas Knot, a head of the Dutch central bank and a member of the ECB's Board of Governors, said investors underestimated the ECB's projected rate hike. 

EUR/USD is Supported by USD Depreciation 

Furthermore, Knot even asserted that the ECB may need to raise interest rates by 50 basis points a few more times in order to lower the rate of inflation. 

It is not going to stop after once a 50 basis point rise, that's for sure. A lot of things need to address, and the analysts are going to address that at a constant rate of 50 basis point gains.

Another member of the ECB Board of Governors, Francois Villeroy de Galhau, expressed a similar message on Wednesday. The EUR/USD rally was also supported by the depreciation of the US dollar. 

Markets believe that the US Federal Reserve will only raise interest rates by 25 basis points at its next FOMC meeting. Meanwhile, the America's economy shows signs of an increasingly visible recession.