- Gold price has rebounded after testing the lower portion of the Rising Channel.
- Lower prices of goods and services would offset a decline in US households’ expenditure.
- An investor risk appetite improvement has dragged the USD Index to near 103.75.
Gold price (XAU/USD) has overstepped Friday’s high around $1,804.00 and is expected to shift its auction profile above the psychological resistance of $1,800.00 in the Tokyo session. The precious metal is expected to continue its upside momentum amid an improvement in the risk appetite of the market participants.
The risk profile has turned positive as investors are betting over a decline in the United States inflation ahead, led by a slowdown in the extent of the US Personal Consumption Expenditure (PCE) Price Index. A reduction in consumption expenditure reflects that the household demand has been trimmed and will be offset by lower prices of goods and services. This led to a recovery in the S&P500 on Friday. Also, a decline in the demand for durable goods has supported expectations for a decrease in inflation ahead.
Meanwhile, the US Dollar Index (DXY) has dropped sharply to near 103.75 after struggling to cross the immediate resistance of 104.00 as a slowdown in household expenditure might force the Federal Reserve (Fed) to trim the interest rate peak ahead. The 10-year US Treasury yields have dropped further to near 3.73%.
Gold technical analysis
Gold price has rebounded after testing the lower portion of the Rising Channel chart pattern formed on a four-hour scale. The upper portion of the aforementioned chart pattern is plotted from the November 15 high of around $1,786.55, while the lower portion is placed from the November 29 low of around $1,740.00. The 100-period Exponential Moving Average (EMA) at about $1,791.00 has been a major support for the Gold price.
Meanwhile, the Relative Strength Index (RSI) (14) has picked strength after dropping to near 40.00, which indicates that the downside is restricted.
Gold four-hour chart
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