Gold is expected to extend Friday’s decline from five-day highs of $1,973 set at the start of the week on Monday. Despite the decline, gold prices remain within last week’s range. As investors become cautious ahead of a key week, with the US Consumer Price Index (CPI). And US Federal Reserve policy releases anxiously expected.
All eyes are on the US inflation statistics and the Federal Reserve.
Following a 1% rally on Thursday. Gold prices built on the advance early Friday before retreating from five-day highs. As the US Dollar (USD) was aided by end-of-week flows and position adjustments. Ahead of this week’s top-tier US Consumer Price Index inflation data and Federal Reserve policy announcements. Even Despite the fact that the Greenback bulls rallied on Friday. The US Dollar concluded the week in the red for the second week in a row. Providing some relief to the Gold price.
The US Dollar tracked a small rebound in US Treasury bond yields across the curve. Despite increased economic concerns and heightened anticipation of a Federal Reserve rate hike pause on Wednesday. Markets have priced in a 76% chance that the Fed would retain its Fed funds rate at 5.00%-5.25%. When its two-day meeting concludes on Wednesday. The recent gloomy economic statistics from the United States. Particularly the ISM Services PMI and Jobless Claims, rekindled hopes of a halt to the recession. The Federal Reserve’s tightening cycle.
Gold price remains susceptible early Monday.
The gold price remains susceptible early Monday. As the US Dollar consolidates Friday’s gains amid a cautiously upbeat market environment. As investors prepare for this week’s significant event risks. The US CPI data will be revealed on Tuesday, with the market anticipating a 4.2% increase in May, down from the 4.9% increase reported in April. The Core CPI statistic, which excludes volatile food and energy costs, is predicted to rise 5.6%, slightly faster than the 5.5% increase in April. The monthly Consumer Price Index is expected to gain 0.2% in May after rising 0.4% in the previous month. However, the Core CPI is likely to rise. to rise 0.4%, the same as the prior month.
The data arrives just a day before the Fed decision, so it might have a significant impact on the Fed’s rate stance. Eric Rosengren, former President of the Bosteon Federal Reserve Bank, tweeted early Monday that he anticipates the Fed to take a hawkish pause on Wednesday, implying that the Fed will keep the door open for additional tightening later this year.
Gold prices are also down, as reported by Reuters, because “physical gold demand slowed in China and India last week, forcing dealers to offer discounts, with volatile prices in India prompting buyers to delay purchases.”
Technical analysis
After being rejected at the bearish 21-Daily Moving Averages (DMA), the price is currently rising. At $1,965, the gold price is falling towards the $1,950 demand region.
The gold price, on the other hand, remains in the $1,941 area between the 21 DMA and the horizontal 100 DMA. As a result, the 100 DMA is the next crucial support level for the gold price.
With the 14-day Relative Strength Index (RSI) below the midline, the gold price stays bearish in the short term.
Acceptance above the 21 DMA barrier on a daily closing basis, on the other hand, is required to neutralize the bearish potential.
A sustained break above the 21 DMA will initiate a new uptrend towards Friday’s high of $1,973, from which the June 2 high of $1,983 will be challenged.
Further up, gold purchasers will prepare to reclaim the flattish price. $1,990 represents 50 DMA resistance.
