|

Gold price flat-lines below 50-day SMA as traders keenly await US PCE data on Thursday

  • Gold price is seen extending its sideways consolidative price move on Wednesday. 
  • Hawkish Fed expectations underpin the USD and act as a headwind for the metal.
  • The downside seems limited ahead of the crucial US PCE Price Index on Thursday. 

Gold price (XAU/USD) continues with its struggle to gain any meaningful traction on Wednesday and remains confined in a multi-day-old trading range through the early European session. The US Dollar (USD) regains positive traction amid growing acceptance that the Federal Reserve (Fed) will wait until the June policy meeting before cutting interest rates, which, in turn, is seen acting as a headwind for the non-yielding yellow metal. Apart from this, the underlying strong bullish sentiment around the global equity markets turns out to be another factor capping the upside for the safe-haven commodity. 

That said, nervousness ahead of the crucial US Personal Consumption Expenditures (PCE) Price Index on Thursday keeps a lid on any further optimism. Furthermore, a fresh leg down in the US Treasury bond yields holds back bearish traders from placing aggressive bets around the Gold price and helps limit the downside. Traders now look to the release of the prelim US Q4 GDP print, due later during the early North American session. This, along with speeches by influential FOMC members and the US bond yields, will drive the USD demand and produce short-term trading opportunities around the XAU/USD. 

Daily digest market movers: Gold price is pressured by modest USD strength, downside remains cushioned

  • A combination of diverging forces fails to provide any meaningful impetus to the Gold price, which extends its consolidative price move in a nearly one-week-old trading range.
  • The Federal Reserve's higher-for-longer interest rates narrative lends some support to the US Dollar and continues to undermine the non-yielding yellow metal on Wednesday.
  • A fresh leg down in the US bond yields, along with the looming US government shutdown and Tuesday's disappointing release of US Durable Goods Orders, should cap the USD.
  • US President Joe Biden emphasized the necessity of finding a solution to prevent a detrimental government shutdown on March 1 as a legislative logjam showed no signs of abating.
  • The US Census Bureau reported that orders for long-lasting US manufactured goods experienced a larger-than-expected decline of 6.1% in January, the most in nearly four years.
  • Meanwhile, the Conference Board's Consumer Sentiment Index fell after three straight months of gains and came in at 106.7 for February, despite declining inflation expectations.
  • The Richmond Fed's Manufacturing Index recorded the fourth successive month of a negative reading, though improved to -5 in February as compared to  -15 in the previous month.
  • Traders now look to the release of the Prelim US GDP print, which is expected to match the original estimates and show that the economy expanded by a 3.3% annualized pace in Q4.
  • This, along with speeches by influential FOMC members, will play a key role in driving the USD demand and producing some meaningful trading opportunities around the XAU/USD.
  • The focus, however, remains glued to the US Personal Consumption Expenditures Price Index on Thursday, which should provide fresh cues about the Fed's rate-cut path.

Technical analysis: Gold price struggles to make it through the 50-day SMA, remains below $2,040-42 hurdle

From a technical perspective, the $2,041-2,042 area, or over a two-week high touched last Thursday, might continue to act as an immediate hurdle and cap gains for the Gold price. That said, a sustained strength beyond will confirm a break through the 50-day Simple Moving Average (SMA) barrier and pave the way for additional gains. Given that oscillators on the daily chart have just started gaining positive traction, the XAU/USD might then climb to the next relevant hurdle near the $2,065 region before aiming to reclaim the $2,100 round-figure mark.

On the flip side, the weekly trough. around the $2,025 region, now seems to protect the immediate downside ahead of the 100-day SMA, currently near the $2,011-2,010 area, and the $2,000 psychological mark. Some follow-through selling below the latter will shift the near-term bias back in favour of bearish traders and drag the Gold price to the $1,984 region en route to the very important 200-day SMA support near the $1,967 zone.

US Dollar price today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.

 USDEURGBPCADAUDJPYNZDCHF
USD 0.09%0.09%0.07%0.33%-0.02%1.03%0.09%
EUR-0.07% 0.02%-0.01%0.27%-0.10%0.96%0.01%
GBP-0.10%-0.02% -0.02%0.25%-0.12%0.94%-0.01%
CAD-0.07%0.00%0.02% 0.26%-0.10%0.96%0.04%
AUD-0.34%-0.27%-0.25%-0.27% -0.37%0.70%-0.26%
JPY0.02%0.09%0.11%0.09%0.36% 1.06%0.11%
NZD-1.04%-0.99%-0.97%-0.98%-0.71%-1.08% -0.96%
CHF-0.09%0.00%0.00%-0.02%0.22%-0.11%0.94% 

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Economic Indicator

United States Core Personal Consumption Expenditures - Price Index (YoY)

The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures." Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.

Read more.

Next release: 02/29/2024 13:30:00 GMT

Frequency: Monthly

Source: US Bureau of Economic Analysis

Why it matters to traders

After publishing the GDP report, the US Bureau of Economic Analysis releases the Personal Consumption Expenditures (PCE) Price Index data alongside the monthly changes in Personal Spending and Personal Income. FOMC policymakers use the annual Core PCE Price Index, which excludes volatile food and energy prices, as their primary gauge of inflation. A stronger-than-expected reading could help the USD outperform its rivals as it would hint at a possible hawkish shift in the Fed’s forward guidance and vice versa.

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

More from Haresh Menghani
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD eases to near 1.1650, eyes US PCE for fresh impetus

EUR/USD turns south to test 1.1650 in European trading on Friday, facing rejection once again near seven-week highs. The pair, however, continues to draw support from persistent US Dollar selling bias, despite a cautious market mood. Traders now await the US September PCE inflation and UoM Consumer Sentiment data. 

GBP/USD holds gains near 1.3350 ahead of US data

GBP/USD sticks to a positive bias near 1.3350 in the European session on Friday. Traders prefer to wait on the sidelines ahead of the key US inflation and sentiment data due later in the day. In the meantime, broad-based US Dollar weakness helps the pair stay afloat. 

Gold remains below $4,250 barrier as traders await US PCE data for directional impetus

Gold gains some positive traction on Friday, though it remains confined in the weekly range. Dovish Fed expectations continue to undermine the USD and lend support to the commodity. Bulls, however, might opt to wait for the US PCE Price Index before placing aggressive bets.

UoM Consumer Sentiment Index expected to post a mild recovery in December

December’s preliminary Michigan Consumer Sentiment Index is forecast to have picked up to 52 from a three-year low of 51.0 in November. A stalled labour market and higher price pressures are likely to weigh on consumers’ confidence.

Canada Unemployment Rate expected to edge higher in November ahead of BoC rate decision

Statistics Canada will release its Labour Force Survey on Friday, and markets are bracing for a weak print. The Unemployment Rate is expected to tick higher to 7% in November, while the Employment Change is forecast to come in flat after a nice gain in October.

Pi Network Price Forecast: Bearish streak nears critical support trendline

Pi Network (PI) edges lower on Friday for the third consecutive day, approaching a local support trendline. The on-chain data suggests an increase in supply pressure as Centralized Exchanges (CEXs) experience a surge in inflows.