Gold price is defending minor bids so far this Friday, gathering pace for the next push higher towards the $2,000 threshold. The renewed gold price rise can be attributed to broad-based US Dollar weakness and sluggish performance in US Treasury yields. As investors await the US Federal Reserve’s (Fed) preferred inflation gauge on Friday for fresh trading impetus.
Gold price was weighed down by a drop in the US dollar and a rise in US Treasury yields.
US Treasury bond yields are attempting a minor bounce. Mirroring the positive sentiment on Asian indices. Meanwhile, traders are refraining from placing new bets on the Gold has outperformed the Federal Reserve’s preferred inflation gauge. The Core Personal Consumption Expenditures – Price Index. The measure is expected to remain stable at 4.7% year on year in February. Though any upward surprise could boost expectations of a 25-basis point Fed rate walk next month. Which would be negative for gold.
However, the reaction to the US PCE inflation data may be influenced by month-end and fiscal year-end flow., Which may overwhelm investors. As a result of USD shorts unwinding, the US Dollar could see a fresh upswing.
The Federal Reserve’s preferred inflation data is in the spotlight.
The US Dollar is licking its wounds early Friday. After Thursday’s weekly Jobless Claims and Q4 final GDP from the US exerted additional downside pressure on the greenback. Allowing gold price to sustain at higher levels.
The United States Commerce Department reported that real GDP increased by 2.6% year on year in the fourth quarter of 2022. A downward revision from the previous quarter. compared to the 2.7% predicted last month. Consumer spending was a contributing factor to the decline. Meanwhile, jobless claims in the United States for the week ending March 25 totaled 198,000, up 7,000 from the previous week and slightly higher than the 196,000 estimate.
The disappointing US economic data releases added to the Federal Reserve’s dovish interest rate outlook, highlighting the US Dollar’s renewed weakness alongside US Treasury bond yields. The benchmark 10-year US Treasury bond yield fell more than 6 basis points (bps) to retest the 3.50% support level.
Gold Technical Outlook
On Thursday, gold price rebounded sharply from the critical rising support, then at $1,953, as seen on the daily sticks.
The 14-day Relative Strength Index (RSI) is trading listlessly but well above the midpoint, indicating that gold’s bullish momentum is still intact.
If the recovery gains traction, gold could aim for the $1,993 falling trendline resistance. To confirm an upside break from a pennant formation, a daily closing above the latter is required.
The way will then be cleared for a test of $2,000. Above which the yearly high of $2,010 will be threatened. The psychological level of $2,050 is seen as the next upside target for Gold bulls. on the other hand, the renewed upside will result in a new decline towards the previously mentioned strong trendline support, which is now at $1,959.
A sustained break below the latter confirms a pennant breakdown, the $1,950 round level.
If the downside momentum continues, gold sellers will aim for the previous week’s low of $1,935.
