GOLD Price Analysis – April 05, 2023
Daily Price Outlook
Gold prices soared to their highest in over a year on Tuesday, finally breaking through and maintaining a position above the $2,000 mark as the US Dollar and bond yields fell. The weaker greenback and additional US data contributed to the yellow metal's rally from a compressed formation. At the time of writing, gold is trading at $2,020, up 1.8%.
US Job Openings Drop to Lowest Level in Nearly Two Years
US job openings in February dropped to their lowest level in nearly two years, accompanied by a continued decline in factory orders. Job openings, an indicator of labor demand, fell from 632,000 to 9.9 million at the end of February, the lowest since May 2021, according to the monthly Job Openings and Labor Turnover Survey (JOLTS) report. "The largest decline in openings was in professional and business services, followed by healthcare. Accommodation and food services saw openings fall back to mid-2022 levels. Construction job openings increased despite the sector's interest rate sensitivity," analysts at ANZ Bank stated.
Factory Orders Decline for Second Consecutive Month
US factory orders declined for a second consecutive month, down 0.7% in February following a 2.1% drop in January and a 1.7% increase in December. This data comes after the Institute for Supply Management (ISM) reported yesterday that its Manufacturing PMI fell to 46.3 last month, the lowest since May 2020, from 47.7 in February.
Persistent Inflation Concerns Expected to Fuel Hawkish Fed Sentiment
In part, the data echoed last week's PCE data, the Federal Reserve's preferred inflation measure, which had mixed results. While both headline and core figures were slightly lower than anticipated, the super core accelerated for a second consecutive month to 4.63% YoY, its highest level since October. "This is not the direction the Fed desires, and we expect the hawkish tilt in Fed comments to persist," analysts at Brown Brothers Harriman explained.
Gold (XAU/USD) Intraday Technical Levels
Support Resistance
1959 2000
1934 2016
1918 2040
Pivot Point: 1975
Gold (XAU/USD) – Technical Outlook
The gold price experienced a significant rally, surpassing our initial target of $2,000.00 and breaking through the recently recorded high of $2,009.78, confirming the continuation of the dominant bullish trend for upcoming sessions.
Our next target is set at $2,040.00, as we anticipate further increases in the short term and intraday basis.
It's important to note that maintaining a position above $2,009.78 is a prerequisite for sustaining the bullish trend.
Related:
* AUD/USD Price Analysis – April 05, 2023
GOLD Price Analysis – April 4, 2023
Daily Price Outlook
Gold (XAU/USD) is currently trading at 1,980.01, down 0.23% in the last 24 hours. As the US Dollar gains strength amidst mixed market sentiments, the price of gold is declining.
OPEC’s Surprise Decision
The Organization of the Petroleum Exporting Countries (OPEC) and its associates, also known as OPEC+, have announced output target cutbacks on Sunday, causing confusion in the inflation forecast and sending oil prices higher. OPEC+ has reduced its output target by 1.1 million barrels per day, resulting in an approximately 6% overnight increase in Brent crude prices.
Moreover, Russia has stated that it will continue to aim for a reduction of 500,000 barrels per day through the end of the year, further fueling inflation concerns and projections of a hawkish shift in the Federal Reserve's outlook for rate hikes.
As a result, XAU/USD declined due to the rising demand for the US dollar as a safe haven, following the approval of a surprise output reduction by OPEC+. The US Dollar Index (DXY) is currently up 0.16%, trading at 102.26.
Odds of Fed Rate Hikes
Data released on Monday from the US suggests that the Federal Reserve is nearing the end of its rate-hike cycle. The ISM manufacturing index for March fell to 46.3, the lowest level since May 2020.
Prior to the release of the US ISM report, markets were anticipating a 25 basis point Fed rate hike in May, with a probability of almost 60%. However, after the disappointing data, the likelihood of a 25 basis point Fed rate hike next month dropped to 54%. Consequently, the rates on US Treasury bonds fell, with the benchmark 10-year yield returning to 3.421%.
Despite revived inflation concerns being ignored by the markets, there has been some improvement in risk sentiment due to the resurgence of dovish Fed forecasts. However, the US Dollar is rebounding, limiting the XAU/USD.
Gold traders are now awaiting the release of mid-tier US economic data later in the day, such as JOLTS Job Openings and Factory Orders, for new trading momentum.
Ultimately, the value of the US Dollar will have an impact on the XAU/USD. Therefore, the attitude of Wall Street is also important. Moreover, statements from Federal Reserve officials will be significant ahead of Friday's crucial Nonfarm Payrolls report from the United States.
Gold Price Chart - Source: Tradingview
Gold (XAU/USD) Intraday Technical Levels
Support Resistance
1959 2000
1934 2016
1918 2040
Pivot Point: 1975
Gold (XAU/USD) – Technical Outlook
The gold price concluded positively yesterday, settling above the $1,962.50 level. It halted the bearish correction and is now poised to resume the primary bullish trend, supported by the EMA50. The next major targets are anticipated to be the $2,000.00 and $2,040.00 levels.
The price is again moving within the symmetrical triangle, and a breach of the $1,985.00 level is necessary to provide the positive momentum required to rally toward the aforementioned targets. It should be noted that the current negativity of the stochastic indicator may impede the attempts to continue rising and could lead to some sideways fluctuations.
Generally, a bullish bias is expected for the near future, contingent upon the price maintaining stability above $1,962.50. A break below this level would pressure the price to revert to the corrective bearish trend, with initial targets set at visiting the $1,933.20 area.
Related:
* USD/JPY Price Analysis – April 04, 2023
GOLD Price Analysis – March 27, 2023
Daily Price Outlook
Gold (XAU/USD) is trading at $1,975.11, down by 0.18% over the past 24 hours. The price of gold has started to decline following strong preliminary US PMI data.
Additionally, as US officials reassure investors, the demand for gold as a safe-haven asset decreases.
Uptick in US Private Sector Business Activity
A sharp increase in overall economic activity suggests that demand is robust, and the Federal Reserve (Fed) will face challenges in attempting to lower US inflation.
On Friday, significant US Durable Goods Orders and PMI data were mixed, providing traders with no clear direction for the metal's next move. Durable Goods Orders improved from January's -5.0% figure to a better -1.0% in February, but fell short of the 0.6% anticipated.
Furthermore, a report revealed that the US Manufacturing PMI increased to 49.3 from the previous release of 47.3 and the consensus of 47.0. The Services PMI rose to 53.8, surpassing forecasts of 50.5 and the previously reported 50.6.
Last week, Fed Chairman Jerome Powell implied that few rate hikes are currently planned to avoid a financial collapse. However, recent PMI data may push the Fed to raise rates further.
The strong PMI data supported the Dollar Index (DXY), trading at 103.07 after a significant rebound. The yield on the US 10-year Treasury fell to 3.372%.
As a result, despite lower rates favoring Gold, the rising US Dollar has weighed on XAU/USD.
Fed Focus on Inflation
Meanwhile, a rapid uptick in Deutsche Bank's credit default swaps has reignited market concerns, leading to a move toward risk appetite on Friday.
Neel Kashkari, President of the Minneapolis Fed, stated on Sunday that recent stress in the banking industry and the potential for a secondary credit crisis push the US closer to recession. If recession concerns become widespread, the Fed would face a difficult decision on raising interest rates.
Furthermore, St. Louis Fed President James Bullard believes the Fed will likely need to raise interest rates more than initially anticipated, as the swift response from US authorities reduces stress in the banking sector, and the economy and inflation remain strong.
James Bullard's comments alleviated risks to the banking industry posed by excessively high rates. It also emphasized that the Fed could now focus on achieving its inflation target instead of worrying about additional bank runs.
Fed officials have expressed confidence in the stability and resilience of the US banking system while emphasizing that inflation remains a top concern. Consequently, the demand for gold as a safe-haven asset decreases after Fed officials reassure investors, weighing on the XAU/USD.
Gold (XAU/USD) Intraday Technical Levels
Support Resistance
1971 2010
1948 2026
1932 2049
Pivot Point: 1987
Gold (XAU/USD) – Technical Outlook
Gold prices recently tested the $2,000.00 barrier once more, but experienced a bearish bounce, subsequently testing the intraday bullish channel's support line shown on the chart.
This was accompanied by positive signals from the stochastic indicator, which is anticipated to encourage the price to resume its primary bullish trend, with the next target set at $2,040.00.
As a result, we will maintain our overall bullish outlook, and the price must surpass the previously recorded high of $2,009.80 to confirm the continuation of the bullish wave. It is important to note that a breach of the $1,962.50 level would halt the expected rise and put pressure on the price to undergo a bearish correction.
The targets for this correction would begin at $1,933.20 and extend to $1,885.90 once the previous level is surpassed. Today's expected trading range is between $1,960.00 support and $2,000.00 resistance.
Related:
* EUR/USD Price Analysis – March 27, 2023
GOLD Price Analysis – March 24, 2023
Daily Price Outlook
Gold (XAU/USD) is currently trading slightly lower at 1,994.30 per ounce but is still close to its highest level in a year. In the early hours of Friday, XAU/USD is struggling to maintain its two-day recovery as it oscillates between $1,991 and $1,994.
Less Hawkish Fed Underpins Gold Price
After the FOMC meeting in March on Wednesday, the price of safe-haven gold increased. This was because the US Federal Reserve (Fed) hinted that tighter credit conditions caused by financial stress could work in the Fed's favor to reduce inflation. As a result, there were speculations that the Bank would probably not need to hike rates as much as anticipated, improving market sentiments.
In addition, the Federal Reserve's chairman, Jerome Powell, said during the press conference that followed the meeting that it was likely that the Fed wouldn't need to hike rates as much as anticipated. This led to gold rising even further.
Gold increased in value because hopes of reduced interest rates are seen as bullish for the metal since it does not provide a return to investors. However, it scaled down its gains after labor market data from the US.
Strong Labor Market Figures
On Thursday, new statistics showed that the initial Jobless Claims report for the week ending March 17 indicated a lower-than-anticipated increase in the number of individuals seeking unemployment benefits. The number of claims was 191K, compared to the predicted 198K.
This suggests that the labor market is better than analysts had predicted, which may lead to increased inflation pressure and the possibility that the Fed may need to raise rates more quickly.
As a result, the benchmark 10-year Treasury note yield increased to 3.410% in line with traders' forecasts of the Fed fund rates. The Dollar Index (DXY) also rose as initial jobless claims decreased, and is now trading a little higher at 102.63.
Consequently, the XAU/USD fell after the announcement of stronger-than-expected job market statistics strengthened the dollar.
Looking ahead, it will be crucial for gold traders to pay close attention to US preliminary PMIs and durable goods orders to seek fresh momentum.
Gold (XAU/USD) Intraday Technical Levels
Support Resistance
1971 2010
1948 2026
1932 2049
Pivot Point: 1987
Gold (XAU/USD) – Technical Outlook
The gold price has reached the first target of $2,000.00 and is facing strong resistance at this level. Despite showing a slight bearish bias due to stochastic negativity, it is anticipated to resume the bullish wave with the next target at $2,040.00.
In order to confirm the continuation of the bullish trend, the price must surpass the recently recorded high of $2,009.78. Failure to do so may lead to a negative formation, pushing the price back to a correctional bearish track. In such a scenario, losses are expected to begin testing $1,962.50 and extend to $1,933.20.
As long as the price remains stable above $1,962.50, the bullish trend is expected to continue in the upcoming period.
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* SP500 (SPX) Price Analysis – March 24, 2023
GOLD Price Analysis – March 22, 2023
Daily Price Outlook
The price of gold, XAU/USD, is currently trading around 1,938.83. On Wednesday, gold prices traded within a narrow range after a sharp decline as the market awaited the Federal Reserve's interest rate decision. Additionally, the demand for gold as a safe haven decreased as concerns over a financial crisis faded.
Easing Banking Fears
Comments from US Treasury Secretary Janet Yellen helped alleviate concerns about banking instability, as she highlighted the Federal Reserve's efforts to provide liquidity to the banking sector through measures such as the Bank Term Funding facility and discount window loans.
As a result of government assistance and easing concerns about a potential banking crisis in the US and Europe, gold prices experienced significant losses. While demand for safe-haven assets played a role in the recent surge of gold, the easing of banking concerns led to a sell-off in the metal.
With concerns about a banking crisis subsiding, markets have begun to anticipate a higher likelihood that the Fed will take a firm stance against inflation, potentially leading to an increase in interest rates. However, this could decrease risk appetite and have a negative impact on XAU/USD.
Fed Interest Rate Decision Ahead
The Federal Reserve's two-day meeting has come into focus, and it may increase rates later in the day to temper hotter-than-usual inflation.
The Fed could vote in favor of an additional 25 basis point increase at its March 22 meeting, bringing US interest rates to a high of 5%. The Fed is also expected to call for more increases to help the US economy keep up with inflation, which rose at a yearly rate of 6% in February.
Over the past year, the Fed has already raised interest rates by 450 basis points and claims it will continue to rely heavily on rate hikes to bring inflation back to its long-term goal of 2% per year.
As the Fed meeting approaches, the US Dollar Index remains steady at 103.19, while the yield on US 10-Year Bonds has fallen to 3.598%.
Despite the DXY's lackluster performance, XAU/USD is struggling to hold steady. The Fed's commitment to continuing the fight against inflation is the reason behind this.
Gold (XAU/USD) Intraday Technical Levels
Support Resistance
1922 1972
1904 2004
1872 2022
Pivot Point: 1954
Gold (XAU/USD) – Technical Outlook
Yesterday, the price of gold went below $1960.00, signaling negative pressure that might lead to a bearish correction with a target of $1909.60.
Nonetheless, technical signs are indicating that a rebound is possible in the near future. The stochastic oscillator is clearly oversold, and the EMA50 is currently giving support from below.
As a result of the conflicting technical variables, it is better to stay out of the market until a clearer signal for the next trend arises. It is worth mentioning that a break of the $1933.20 support level will send the price farther lower, possibly to $1909.60 or even $1885.90. In contrast, breaking above the $1962.50 resistance level is critical to restarting the major bullish trend, with targets at $2000.00 and $2040.00.
Related:
* EUR/USD Price Analysis – March 22, 2023
GOLD Price Analysis – March 20, 2023
Daily Price Outlook
The price of gold, XAU/USD, is currently trading around $1,988. On Monday, amidst growing concerns about a financial crisis, gold prices moved slightly below their highest levels in 11 months as markets assessed the influence of the Federal Reserve and other major central banks' emergency liquidity measures.
Gold as a Safe-Haven Asset: How Recent Market Turmoil is Affecting XAU/USD?
Several major central banks, including the Federal Reserve and the European Central Bank, have announced additional measures to provide liquidity to the banking industry and prevent any potential spillover from the recent failures of several institutions.
Additionally, a deal supported by regulators saw troubled lender Credit Suisse Group AG acquired by Swiss competitor UBS Group AG.
The Federal Reserve's expanded liquidity policies mark a reversal of a year of monetary tightening aimed at combating inflation and are expected to support strong demand for gold.
The recent turmoil in the banking sector has fueled safe-haven demand for gold, leading to an increase in the XAU/USD price.
Focus on Fed Monetary Policy and Its Impact on Gold Prices
Meanwhile, the deal between UBS and Credit Suisse has reduced the demand for US government bonds. The expectation of additional market liquidity has boosted the recent increase in US government bond rates and supported the recovery of the US dollar while putting pressure on gold prices.
The US Dollar Index (DXY) is currently trading sideways at 103.80, while the yield on US 10-Year Bonds has risen to 3.414%.
Investors are now awaiting Wednesday's Federal Reserve (Fed) interest rate announcement. Despite recent unrest and concerns in the banking sector, several analysts predict that Fed Chair Jerome Powell will raise rates by 25 basis points (bps).
A potential rise in the price of gold could occur if the US Federal Reserve indicates caution about future rate increases or holds off on current increases. However, any hawkish remarks from the Fed are likely to cause XAU/USD to decline.
Gold Price Chart - Source: Tradingview
Gold (XAU/USD) Intraday Technical Levels
Support Resistance
1971 1987
1965 1997
1956 2002
Pivot Point: 1981
Gold (XAU/USD) – Technical Outlook
The gold price achieved new strong rises to surpass our waited target at $1,960.00 and approach the psychological barrier at $2,000.00, which supports the continuation of the bullish trend on the intraday and short-term basis, noting that surpassing the mentioned barrier will push the price to head towards $2,040.00 areas as a next main station.
The EMA50 provides continuous positive support to the price, while stochastic negativity might cause some temporary bearish bias before resuming the bullish bias.
In general, we suggest the continuation of the overall bullish trend domination, and the price needs to hold above $1,960.00 as a first condition to continue the expected rise, as breaking it will press on the price to achieve some intraday bearish correction before turning back to rise again.
The expected trading range for today is between $1,960.00 support and $2,000.00 resistance.
Related:
* EUR/USD Price Analysis – March 20, 2023
GOLD Price Analysis – March 16, 2023
Daily Price Outlook
The XAU/USD is currently trading at 1,910.42, indicating a 0.41% decrease within a day. On Thursday, the price of gold fell from its six-week high as speculators cashed in on gains. However, the yellow metal's status as a safe haven asset was strengthened by fears of an impending financial crisis and uncertainty regarding monetary policy.
Credit Suisse Crisis Sparks Risk Aversion and Impacts Gold Prices
Global market participants are currently concerned about a potential repeat of the 2008 financial crisis as the US banking crisis has now reached Europe and affected Credit Suisse (CS), which is considered to be a bank with significant worldwide systemic importance.
Following the announcement on Wednesday that Credit Suisse's top investor would not provide the Swiss bank with more financial support, global stocks, including Credit Suisse's shares, experienced a decline.
The refusal of the Saudi National Bank to invest additional funds in Credit Suisse led to an acceleration in the leading European bank's Credit Default Swaps (CDS), which then caused a financial market crisis.
Furthermore, news that representatives of the European Central Bank (ECB) approached banks to inquire about their exposure to Credit Suisse only added to the already existing risk-off sentiment.
When the banking crisis spreads to Europe and targets Credit Suisse, investors tend to opt for safe-haven assets like gold, causing the price of XAU/USD to increase. However, as investors began to take profits, gold prices dipped from their six-week high.
Fed Rate Hike Speculations and Their Impact on Gold Prices
Traders showed little interest in US statistics amidst growing concerns about Credit Suisse and the possibility of a new financial crisis.
US retail sales fell by 0.4% in February, below market expectations of 0.3% and a downward revision from the prior month's figure of 3.2%. The Producer Price Index (PPI) also decreased from 5.7% in January to 4.6% YoY, falling short of the market projection of 5.6%.
The data shows a noticeable drop in US inflation, which has lowered expectations of a hawkish stance by the Federal Reserve (Fed). Nevertheless, Reuters reports that the Federal Open Market Committee (FOMC) is still expected to raise the federal funds rate by 25 basis points at its meeting on March 22.
As traders anticipated further Federal Reserve interest rate increases, Treasury rates rose to 3.489%, and the DXY rebounded to 104.57, putting pressure on XAU/USD.
Gold (XAU/USD) Intraday Technical Levels
Support Resistance
1890 1942
1862 1965
1838 1993
Pivot Point: 1914
Gold (XAU/USD) – Technical Outlook
The gold price encountered substantial resistance at $1,929, trading with clear negativity and retesting the breached resistance for the bullish pennant's pattern, which was influenced by stochastic negativity. Hoping for favorable momentum to help push the price back into the main bullish wave, which has its next objective of $1,962.00.
The EMA50 continues to support the projected bullish trend, and a break of $1,929 is needed to ease the goal of reaching the desired level.
But, breaking $1,906.00 will put the price under extra downward pressure, causing it to test the most significant support at $1,878.80 before any new attempt to rise.
Today's trading range is predicted to be between $1,894.00 support and $1,936.00 resistance.
GOLD Price Analysis – March 15, 2023
Daily Price Outlook
The price of gold, XAU/USD is now trading around 1,903. After dropping from a six-week high in the previous session, gold prices continued to decline on Wednesday as fears over a banking crisis in the country faded, and a mixed figure on US inflation created some confusion over the Federal Reserve's attitude on monetary policy.
Bank Crisis Subsides
In the last few days, the collapse of American banks caused a rush toward safe havens, which caused the price of yellow metal to rise rapidly. However, following the failure of the Silicon Valley Bank, the US government took action to reaffirm public confidence in the banking industry.
The Fed moved quickly to loosen restrictions on bank borrowing. The White House also assured SVB depositors that it would cover withdrawal costs.
Therefore, when concerns about the banking sector spread following the collapse of SVB last week faded, investors surged into stocks in US markets overnight, and gold prices were on edge.
US Inflation has Slowed
Meanwhile, the Consumer Price Index (CPI), which measures inflation in the US, eased. The US CPI and CPI ex Food and Energy met 6.0% and 5.5% YoY market predictions, below 6.4% and 5.6% respective prior readings.
After the CPI report, Reuters said that a government report showed US inflation stayed high in February, and fears of a long-term financial crisis faded. Therefore, the Federal Reserve might raise its benchmark rate by a quarter percentage point next week and again in May.
The US Dollar Index (DXY) picked up bids to retest the intraday high of 103.76 after the news that the Fed might raise its benchmark rate. That puts downward pressure on the price of gold. The yield on 10-year US Treasury bonds increased to 3.678%.
The hawkish Fed wagers and positive US Treasury bond rates enable the US Dollar to maintain its strength and provide XAU/USD bears reason for optimism.
Gold (XAU/USD) Intraday Technical Levels
Support Resistance
1893 1913
1885 1923
1874 1932
Pivot Point: 1904
Gold (XAU/USD) – Technical Outlook
The price of gold experienced a temporary negative pressure, causing it to settle within the bullish pennant's pattern once again. However, new positive signals from the stochastic indicator are expected to motivate the price to continue its bullish trend for the day, with the next target located at $1,928.60.
As such, we maintain a bullish outlook, provided that the price remains stable above $1,878.80. Any continued decline and a breach of this level may lead to further losses, potentially reaching the $1,828.70 areas.
For today's trading, we anticipate a trading range between support at $1,890.00 and resistance at $1,928.00.
GOLD Price Analysis – March 09, 2023
Daily Price Outlook
The price of gold, XAU/USD, is currently trading at $1,814.99 and remaining stable as traders await the release of United States jobs data. On Wednesday, Federal Reserve Chair Powell addressed the House Financial Services Committee and emphasized the Fed's reliance on data. Powell also stated that the
Repetitive Remarks of Federal Reserve Chairman
Fed had underestimated the resilience of GDP and inflation, supporting the central bank's hawkish stance. As a result, market participants anticipate a 50 basis point rate increase in March, compared to the 0.25% forecasted last week.
Following the hawkish comments made by Fed Chair Powell, the US dollar gained strength against other major currencies and is currently trading at 105.58. Additionally, the yield on the 10-year bond rose to 3.991%.
The price of gold bounced back from a low of one week but didn't show much activity as Powell repeated his hawkish stance in front of the House Financial Service Committee.
US Economy and Gold: How Economic Data Impacts the Price of Gold
Positive economic data from the US has resulted in downward pressure on the XAU/USD market, despite repeated remarks from Fed Chair Powell offering relief to gold traders.
On Wednesday, the US ADP Employment Change rose to 242K in February, exceeding expectations of 200K and the revised figure of 119K for the previous period.
Additionally, the US JOLTS Job Openings for January increased to 10.824M, surpassing the expected 10.6M but lower than the previous 11.234M.
However, the lack of a significant surprise for the market and the cautious sentiments ahead of Friday's important United States jobs data contributes to the most recent inactivity of Gold.
US to Lift COVID-19 Travel Restrictions for Chinese Travelers
On Wednesday, China called for the normalization of cross-border travel, as the US is reportedly looking to ease COVID-19 testing restrictions for Chinese tourists. Additionally, the US has adopted a relaxed schedule and lifted testing requirements for tourists from China in a bid to boost trade.
Looking forward, the Producer Price Index (PPI) for February and the monthly Consumer Price Index (CPI) for China is expected to impact gold prices.
Gold (XAU/USD) Intraday Technical Levels
Support Resistance
1809 1823
1802 1831
1794 1838
Pivot Point: 1816
Gold (XAU/USD) – Technical Outlook
After briefly showing bullish movement around the $1828.70 level, gold prices have since reversed and continued their downward trend, currently within the depicted bearish channel on the chart, with a target of $1788.20. Due to the prior level break, the EMA50's negative pressure on the price supports the continuation of this anticipated decline.
However, a potential stop to the bearish scenario and a likely attempt at recovery with an initial target of $1878.80 could occur if the price breaks above $1828.70 and $1843.70. The expected trading range for the day is between the support level of $1790.00 and the resistance level of $1825.00.
GOLD Price Analysis – March 02, 2023
Daily Price Outlook
The price of gold (XAU/USD) has fallen to $1,835.46 after a three-day recovery from a two-month low due to rising Treasury bond rates. As a result, traders of the precious metal struggled to find compelling reasons to support the recent uptick.
China's PMI Signals Economic Recovery, Gold Prices Respond
Recent PMI data shows that China's manufacturing sector expanded in February, with the National Bureau of Statistics reporting that the manufacturing PMI increased to 52.6, the highest figure since April 2012. This indicates a positive economic recovery in the leading industrial country and one of the main buyers of gold. The stronger-than-expected Chinese PMIs are supporting a risk-on sentiment.
In addition, the US dollar weakened due to stronger commodity currencies, which were boosted by China's positive manufacturing activity data, giving gold buyers an advantage. However, there are concerns about the US Federal Reserve's hawkish stance and worries about further inflationary pressures that could limit the price of XAU/USD.
Fed Officials Signal Possible Interest Rate Hikes in Response to Inflationary Pressures
Federal Reserve (Fed) officials have recently stated that the current monetary policy may not be enough to control high inflation in the near future, and further rate hikes may be necessary to address the issue. In addition, the manufacturing PMI for February was released at 47.7%, slightly up by 0.3% from the January reading of 47.4%.
This marks the third consecutive month of decline for the US economy after 30 months of growth. The release resulted in a considerable sell-off of both risky and safe assets. However, the prices paid index increased by more than experts had anticipated.
The DXY is currently trading at 104.59, indicating a decline in investor risk appetite. Additionally, hawkish comments from Federal Reserve officials regarding potential rate hikes, coupled with signs of rising inflationary pressures, caused the 10-year Treasury yield to climb to 4% and the expected final rate of the Fed to increase to 5.50%.
The rise in US Treasury bond rates is a reflection of the market's worries about economic contraction and inflation. This development reinforces expectations of a US Dollar rebound and a drop in the XAU/USD price.
Gold (XAU/USD) Intraday Technical Levels
Support Resistance
1825 1846
1813 1856
1803 1868
Pivot Point: 1835
Gold (XAU/USD) – Technical Outlook
The price of gold closed yesterday with a definite positive trend, closing above $1828.70, which is considered a signal to begin an intraday bullish wave. However, we can see that the price started the day badly, placing pressure on the stated level, which now serves as a critical support line. The price is being influenced by stochastic negativity, which is now visible.
As a result, the price is caught between technical variables that make us prefer to stay away until we have a better indication of the next trend. Breaking $1828.70 will reignite the correcting bearish scenario, pushing the price towards $1788.20 as the next key objective. Consolidating above it and exceeding $1840.00, on the other hand, will lead to additional gains and a near-term visit to $1878.80.
Today's trading range will likely be between $1815.00 support and $1850.00 resistance.