- Gold price edges lower, snaps a three-day uptick, as mid-tier US data awaited.
- US Dollar and US Treasury yields firm up, despite a mixed market sentiment.
- Gold price eyes acceptance above $2,200 and Friday’s US Core PCE inflation.
Gold price is duplicating the move seen in Wednesday’s Asian trading, as it edges lower below $2,200 early Thursday. Gold price capitalizes on sustained US Dollar (USD) strength and a rebounding US Treasury bond yields struggle, as traders take account of the latest hawkish US Federal Reserve (Fed) commentary.
Gold price slips on Fed Waller’s hawkish comments
Earlier in the Asian session, Fed Governor Christopher delivered a hawkish message while speaking about monetary policy at the Economic Club of New York. His comments fuelled a fresh uptick in the US Treasury bond yields and added to the US Dollar upside while weighing on the non-interest-bearing Gold price.
Waller said "there is no rush to cut the policy rate,” adding that the “Fed may need to maintain current rate target for longer than expected.” Markets are now pricing about a 64% probability that the Fed will begin cutting rates in June, down from a 70% chance seen a day ago.
The mixed trading in Asian stock markets, despite a Wall Street rally overnight, also lends support to the safe-haven US Dollar, Investors stay cautious amid a probable Japanese forex market intervention, as the USD/JPY pair remains on its way to the 34-year high of 151.97 reached Wednesday. Japan’s Chief Cabinet Secretary Yoshimasa Hayashi warned Thursday that the administration would not rule out any options to counter against excessive currency moves.
In case of an FX intervention by the Japanese authorities, USD/JPY is likely to come under intense selling pressure on a Yen rally, smashing the US Dollar alongside. Gold price could subsequently resume its uptrend toward the all-time high of $2,223.
However, a sense of caution ahead of Good Friday’s US PCE Price Index data could limit the Gold price action. Attention now turns toward the final Q4 Gross Domestic Product (GDP) estimate from the US alongside the weekly Jobless Claims, Pending Home Sales and Personal Spending data due later on Thursday for fresh hints on the timing and scope of the Fed interest rate cuts.
Gold price technical analysis: Daily chart
The short-term technical outlook for Gold price leans in favor of buyers with ‘buy-the-dip’ trading likely to continue.
As the Bull Flag remains in play, Gold price keeps the measured target at $2,251 in sight.
Before that level, Gold price needs to recapture the $2,200 threshold on a daily closing basis. Acceptance above that level will put the record high at $2,223 at risk.
The 14-day Relative Strength Index (RSI), is flirting with the overbought threshold, suggesting that there is enough room for the upside.
On the flip side, any retracement will likely find immediate support at the March 22 low of $2,157, where the bullish 21-day Simple Moving Average (SMA) aligns.
Further down, the $2,147 support will be a tough nut to crack for Gold sellers. The last line of defense for Gold buyers is seen at the $2,140 round figure.
(This story was corrected on March 28 at 09:35 GMT to say that "Gold price is duplicating the move seen in Wednesday’s Asian trading, as it edges lower below $2,200 early Thursday, not early Wednesday.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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 edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.