Trending
Commodities
  • WTIOIL
    70.04 USD -2.02%
  • XAG
    23.96 USD -0.14%
  • XAU
    2010.5 USD 0.48%
  • XCU
    3.73 USD -1.34%
  • XPD
    1478 USD -0.78%
  • XPT
    1048 USD 0.64%
  • ALU
    2243.47 USD -2.23%
  • RICE
    18 USD -1.75%
  • BRENTOIL
    74.17 USD -1.32%
  • SOYBEAN
    14.35 USD -0.66%
  • NG
    2.27 USD 0.27%
  • WHEAT
    256.22 USD -1.15%

Gold is stuck in a neutral zone – slips below $2,000 again

Gold still needs to make a meaningful move despite another day full of macro data. Will we see it above $2,000 soon?

US inflation stays elevated – more US data released

Gold traders sold the metal on Friday. However, losses were limited as sentiment in the precious metals market remained bullish.

With a 0.1% monthly gain and a 4.2% annual increase, the PCE Price Index was in line with predictions for March. The Core PCE price index rose 0.3% month-over-month and 4.6% annually. While the monthly rate was in line with projections, the annual rate was slightly higher than what was anticipated by Wall Street.

The increase in personal income was 0.3%, which was above the median forecast of 0.2% growth. Moreover, after a downwardly revised 0.1% uptick in February, the Commerce Department said Friday that personal spending was flat in March.

You may also read: Silver may reach record highs as supply is reaching record lows

In addition, the Fed’s favored gauge of wage growth, the Employment Cost Index, increased by 1.2%, which was beyond forecasts. As a leading indicator of service price inflation, the Fed hopes to see wage growth slow to the 3.5% annual pace consistent with its inflation objective.

One last rate hike

Higher interest rates from the Fed’s fight against inflation, as well as tightening lending conditions, might reduce spending by both consumers and businesses. Another risk is the stalemate over whether or not to increase the federal government’s $31.4 trillion borrowing ceiling.

The Fed is widely anticipated to raise interest rates by 25 basis points the following week, marking the end of the Fed’s quickest monetary policy tightening cycle since the 1980s. Since March of last year, when it was near zero, the Fed has lifted its policy rate 475 basis points to where it is now, between 4.75% to 5.00%.

Don’t miss: 5 best platinum stocks in 2023

However, if the United States enters a recession and the Fed pauses its rate hike cycle, gold may see increased demand later this year. Based on this theory, gold prices soared to near-record levels earlier in April and were on track to end the month over 1% higher.

The short-term trend is neutral, the long-term uptrend remains intact

If prices continue to fall, technical analysis suggests that they will encounter support at the low from last week, around $1,975. If selling pressure persists, bearish traders will view this as a new opportunity, and the bullion price might fall below the next important support of around $1,955.

Gold may fall to the monthly low of roughly $1,950. Ahead of the $2,010 supply zone and the $2,020 horizontal barrier, however, any positive move appears to be meeting some resistance near the $2,000 psychological mark.

Also interesting: The green is back – hurray for big tech

Gold’s price would rise to around $2,040 if it maintained strength above the latter, which would serve as a new trigger for bulls. Eventually, bulls may try to test the yearly high, which was seen earlier this month in the $2,047-$2,049 range.

Gold

Gold futures 1D chart, source: tradingview.com, author’s analysis

Tomáš is a financial reporter with US markets as his main field. Tomáš is an aspiring author and entrepreneur aspiring to help people get better in financial knowledge.

Comments

Post has no comment yet.

Want add your comment? Sign up or Sign in