The gold price is at its highest level since March 2022, near $2,025 early Wednesday, extending the previous upsurge amid widespread weakness in the US dollar.
Weak US data boosts dovish Federal Reserve bets.
For new trading impetus, all eyes are now on top-tier US economic data and speeches from US Federal Reserve (Fed) policymakers. Despite the fact that the US JOLTS Job Openings and Factory Orders data were disappointing, investors remained concerned about the looming recession risks, given the US economy’s deterioration.
The Labor Department reported Tuesday in its monthly Job Openings and Labor Turnover Survey that available positions totaled 9.93 million, a decrease of 632,000 from January’s downwardly revised figure. For the first time, job openings fell below 10 million in February. For the first time in nearly two years. US factory orders fell by 0.7% in February, compared to the -0.5% expected, marking the second consecutive monthly decline.
The poor run of US economic data has led markets to price in a 42% chance of a 25-basis point (bps) Fed rate hike in May, down from around 58% prior to the data release. Fears of a US recession and a dovish Fed outlook pushed gold to a yearly high, at the expense of the US dollar and US Treasury bond yields.
Gold Technical Outlook
After storming through the critical rising trendline support, then at $1,968. And closing Tuesday well above it, gold price validated a pennant breakout.
The 14-day Relative Strength Index (RSI) is holding firm above the midline, just below overbought territory, indicating that there is still room for further gains.
As a result, gold buyers must break through the $2,030 resistance level in order to test the pennant target of $2,043. The psychological level of $2,050 is seen as the next upside barrier.
On the other hand, immediate support is seen at the previous yearly high of $2,010, below which the critical $2,000 mark will put the bullish commitments to the test.
If the downtrend continues, gold sellers could target the pennant resistance-turned-support at $1,988.
