- Gold price holds at nine-month highs near $1,930 amid a strong start to the week.
- US Dollar falls further on hopes of slower Federal Reserve rates hikes, USD/JPY drop.
- United States holiday could prompt high volatility amid thin liquidity.
- Gold price could see a pullback, as Relative Strength Index holds well above 70.00.
Gold price is taking a breather near the highest level seen since April 2022 at $1,929 as investors contemplate the next move amid a holiday in the United States. The US stocks and bond markets are closed on Monday in observance of Martin Luther King Jr. Day.
United States Dollar faces a double whammy
The bearish pressure around the United States Dollar remains unabated at the start of the week, helping the Gold price to gain further ground above the $1,900 mark. The US Dollar faces a double whammy so far in Monday’s trading, as the sell-off in the USD/JPY pair is having an adverse effect alongside increased expectations that the US Federal Reserve (Fed) will hike rates at a slower pace amid softening the United States Consumer Price Index (CPI). USD/JPY is under intense selling on hopes that the Bank of Japan (BoJ) could hint toward a hawkish pivot at its policy meeting this week, as the central bank fails to defend its yields’ policy, despite extensive bond-buying.
Meanwhile, markets are now pricing 25 basis points (bps) Federal Reserve rate hikes in February and March after the headline United States Consumer Price Index for December increased 6.5% over the 12 months while the core CPI dropped to 5.7% YoY, meeting estimates and against November’s 6%. The Federal Reserve peak rate is expected to be around 4.97%, well below the previous expectations of between 5.0%-5.25%.
Thin trading to extend amid United States holiday
Holiday-thinned market conditions are likely to extend ahead, keeping the volatility around Gold price relatively high amid risks of exaggerated moves. Also, investors could resort to repositioning ahead of the United States Retail Sales data and China’s Gross Domestic Product (GDP ) due later this week, while a slew of speeches from the US Federal Reserve policymakers will also be closely scrutinized for the world’s most powerful central bank’s future policy path.
Gold price technical analysis: Daily chart
Gold price has pulled back sharply from a nine-month top of $1,929, as suggested by an overbought 14-day Relative Strength Index (RSI). The daily RSI currently stands at 75.21, well past the critical 70.00 level.
On its way down, strong support awaits at the $1,920 round level, below which the intraday low at $1,917 could be revisited. A sustained break below the latter could trigger a further correction toward the $1,900 threshold.
On the flip side, if Gold bulls manage to regain control and take out the multi-month high, then a fresh upswing toward the $1,940-$1,941 supply zone could be in the offing. The next stop for Gold buyers is seen at $1,950, the psychological level.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold price sits at all-time highs above $2,230, US PCE eyed
Gold price hit all-time highs at $2,236 on Thursday to finish Q1 2024 with a bang. Most major world markets, including the US are closed due to Holy Friday, leaving volatility around Gold price highly subdued. US PCE inflation and Powell are awaited.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.