Spot gold prices rose by more than $20 last week, closing at around $2,035 an ounce. A weaker U.S. dollar gave gold prices a boost, as did safe-haven demand spurred by tensions in the Middle East. This week, the gold market will usher in heavyweight data such as the US PCE inflation indicator, which is expected to trigger new market trends. Spot gold climbed $22.17 last week to close at $2,035.33 per ounce, an increase of 1.1%. Gold prices hit a high of $2,041.34 per ounce last week.
Eren Sengezer, an analyst at the well-known financial website FXStreet, wrote an article last Friday (February 23) that gold prices need to stabilize above $2,030 per ounce to attract gold buyers.
The gold market remains constrained by weeks of tight range trading as resistance at $2,050 an ounce continues to hold.
Sengezer said this week's U.S. PCE inflation data may help gold prices break out of recent trading ranges.
Bob Haberkorn, senior market strategist at RJO Futures, said: "The rise in gold prices is mainly due to the slight weakness of the U.S. dollar. The precious metals market is very subtle at the moment, but even though interest rates are so high, there is still a lot of safe-haven buying."
Yeap Jun Rong, market strategist at IG, said: "Gold is regaining some influence from safe-haven funds, given that recent geopolitical developments suggest that tensions will last longer."
FXempire market analyst James Hyerczyk said in a report: "The recent rise in gold prices has been mainly driven by the weakness of the US dollar and rising tensions in the Middle East, especially concerns about political stability and oil supply disruptions, which has strengthened gold as a preferred safe haven. status of assets.”
Gold prices may react to this week's U.S. PCE inflation data
FXStreet analyst Eren Sengezer takes stock of economic events that may have an impact on the U.S. dollar and gold this week. Sengezer believes that gold prices may react to US PCE inflation data.
U.S. durable goods orders data for January will be released on Tuesday. Durable goods orders are expected to fall 4.5% in January after being flat in December. While the data is unlikely to trigger a major market reaction, the positive surprise could support the dollar.
The U.S. Bureau of Economic Analysis (BEA) will release the revised gross domestic product (GDP) for the fourth quarter of 2023 on Wednesday. The market is not expecting a revision to the initially announced annualized growth rate of 3.3%.
The January personal consumption expenditures (PCE) price index to be released this Thursday will be closely watched by market participants. The core PCE price index, the Fed's preferred measure of inflation, is expected to rise 0.4% month-on-month in January after rising 0.2% in December.
The market is quite certain that the Federal Reserve will keep the policy interest rate unchanged at the range of 5.25%-5.5% at the March policy meeting. According to CME's "Fed Watch Tool", the probability of a rate cut in May is currently 20%.
Sengezer pointed out that market positioning suggests that even if PCE inflation data confirms that the Fed will not adjust policy before June, the dollar does not have much room to rise. On the other hand, weak core PCE inflation data (0.2% or lower) may revive expectations of a rate cut in May. In this scenario, U.S. Treasury yields could head lower, allowing gold to gain bullish momentum.
During the Asian trading session this Friday, investors will pay close attention to the manufacturing PMI and non-manufacturing PMI data released by the National Bureau of Statistics of China. If both PMIs are in expansionary territory above 50, gold could benefit from optimism about an improving demand outlook.
Gold technical outlook this week
On the upside, gold prices have broken through the short-term resistance level of the 50-day moving average of $2,030 per ounce. Sengezer said gold needs to stay above this level to attract buyers. In this case, gold prices may rise further towards $2,050/oz and $2,065/oz.
However, the relative strength index (RSI) on the daily chart fell back to 50, reflecting the lack of bullish momentum. The 23.6% Fibonacci retracement level of the latest uptrend forms a pivot level at $2020/oz.
Sengezer pointed out that if gold prices fall below $2020/ounce and confirm this level as resistance, gold prices may encounter strong support at $2005/ounce-$2000/ounce (100-day simple moving average, psychological level). Once the above support is lost, gold prices may target $1,980 per ounce (38.2% Fibonacci retracement level).
Economies, a well-known financial website, wrote an article last Friday analyzing the technical prospects of gold prices. The article pointed out that gold prices showed a clear upward trend and were far away from 2016.90 US dollars per ounce, thus strengthening the expectation that gold prices will continue to have a bullish trend in the next few trading days. The path for gold prices to rise towards the next target of $2,065.70 per ounce is open.
Economies added that it needs to be reminded that it is important for gold prices to remain above $2016.90 per ounce to reach the above target price.
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Indonesia
2024-02-26
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