The price of gold increases due to demand for safe-haven assets, with attention now turning towards US Retail Sales.
FUNDAMENTAL OVERVIEW:
- The gold price seeks stability, yet the short-term forecast remains uncertain.
- Persistent US inflation in February has heightened uncertainty regarding potential Fed rate adjustments in June.
- Investors will now turn their attention to February’s US PPI and Retail Sales data.
During Wednesday’s European session, the gold price (XAU/USD) sees marginal gains, yet its near-term trajectory remains uncertain. Investor anticipation of Federal Reserve (Fed) rate cuts in June has diminished, contributing to this uncertainty. Following Tuesday’s release of the United States Consumer Price Index (CPI) data for February, which revealed unexpectedly high figures, the precious metal experienced its second-largest single-day decline in a month.
The yearly headline and core CPI exceeded market expectations, driven by increased gasoline and shelter prices. This rise in stubborn price pressures has elevated the opportunity cost associated with holding non-yielding assets like gold, dampening market expectations for the Federal Reserve to reduce interest rates at its June policy meeting. Should expectations of the Fed postponing rate cuts extend beyond June, it could exert significant downward pressure on the price of gold.
Boosted by the Federal Reserve’s hawkish policy stance, 10-year US Treasury yields surged to 4.16% as grappling with persistent high inflation proves challenging. Concurrently, the US Dollar Index (DXY), monitoring the US Dollar against six key currencies, shows a slight uptick, hovering around 103.00.
GOLD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
Gold is currently trading within an up channel.
Gold is positioned below20&50 Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Buying zone, while the Stochastic oscillator suggests a Positive trend.
Immediate Resistance level: 2166.38
Immediate support level: 2149.97
HOW TO TRADE GOLD
Following a consolidation phase, gold experienced an upward breakout, leading to a surge in its price. However, it failed to maintain this upward momentum and subsequently declined. Currently, the price of gold is holding steady within a support zone. If this support zone is respected, there is potential for further upward movement.