Gold prices gain momentum on Thursday as the US Dollar weakens. The latest CPI report indicates slowing inflation in April, increasing market expectations for Fed rate cuts this year. Lower interest rates could favor gold by reducing borrowing costs for investment.
Gold traders will monitor US Building Permits, Housing Starts, Initial Jobless Claims, the Philly Fed Manufacturing Index, and Industrial Production on Thursday. Fed officials Barr, Harker, Mester, and Bostic are also speaking. However, hawkish remarks from Fed members could strengthen the USD and limit gold’s near-term gains.
On Thursday, the gold price (XAU/USD) rises due to a weaker USD, following a CPI report showing slower US inflation in April, leading to increased bets on Fed rate cuts. Lower rates benefit gold by reducing investment borrowing costs.
Gold traders are set to watch US Building Permits, Housing Starts, weekly Jobless Claims, the Philly Fed Manufacturing Index, and Industrial Production on Thursday. Additionally, comments from Fed officials Barr, Harker, Mester, and Bostic could impact the USD and gold prices, especially if their tone is hawkish.
Daily Digest Market Movers: Gold Price Edges Higher Amid Cooling US Inflation, Weaker Retail Sales
- The US Consumer Price Index (CPI) increased by 3.4% year-on-year in April, slightly down from 3.5% in March, meeting market expectations.
- Monthly headline CPI inflation decreased to 0.3% in April from 0.4% in March, below the expected 0.4%.
- Core CPI inflation, excluding food and energy, rose by 3.6% year-on-year in April, down from 3.8% previously. Monthly core CPI eased to 0.3% from 0.4% in March.
- US Retail Sales were flat in April, after a 0.6% rise in March, falling short of the 0.4% forecast.
- Fed Bank of Minneapolis President Neel Kashkari emphasized the need for careful monitoring of the economy to determine if current policy rates are sufficiently restrictive.
- Financial markets are pricing in a nearly 75% chance of a Fed rate cut by September 2024, up from 65% before the US CPI report, per the CME’s FedWatch Tool.
- Global gold demand increased by 3% to 1,238 tonnes in Q1 2024, the highest first-quarter demand since 2016, according to the World Gold Council.
Technical Analysis: Gold Price’s Bullish Outlook Holds Strong
Gold prices climb today, showing a bullish trend since May 2, as XAU/USD stays above the 100-period EMA on the four-hour chart.The RSI remains in bullish territory at around 72, suggesting potential consolidation before further gains.
The first resistance level is near the upper boundary of the ascending channel and the $2,400 psychological level. A breakout above could target $2,432 (all-time high) and $2,500.
On the downside, breaking below $2,345 could lead to $2,334 (100-period EMA) and $2,300.
US Dollar Price This Week
The following table illustrates the percentage fluctuation of the US Dollar (USD) relative to various major currencies for this week. Among them, the US Dollar exhibited its lowest performance against the New Zealand Dollar.
The heatmap displays the percentage shifts of major currencies in relation to one another. It operates with a base currency chosen from the left column and a quote currency from the top row. For instance, selecting the Euro from the left column and moving horizontally to the Japanese Yen will reveal the percentage change denoted as EUR (base)/JPY (quote) within the respective box.
