Gold price forecast have recently paused their bullish momentum due to a modest increase in the US dollar and an improvement in global risk sentiment. This trend comes at a time when the US Federal Reserve’s potential interest rate cuts are gaining attention, following key inflation data. As investors closely monitor these developments, the gold market’s next moves remain a focal point.
US Inflation Data Boosts Gold Investment Appeal
The latest inflation data from the United States, released last Friday, hints at a potential interest rate cut by the Federal Reserve in June. This prospect has led to a surge in gold investment, as investors seek safe-haven assets amid uncertain economic conditions. Although gold price doesn’t generate interest like other investments, its value often rises when interest rates fall.
Core PCE Price Index Indicates Subtle Inflation Increase
The Bureau of Economic Analysis reported a 0.3% increase in the Personal Consumption Expenditures (PCE) Price Index for February, with a year-over-year rise of 2.5%. This slight uptick from the previous 2.4% reinforces concerns about inflation. When excluding the volatile food and energy sectors, the core PCE Price Index rose by 2.8% year-over-year, slightly below the revised 2.9% from the prior reading.
Federal Reserve’s Stance on Inflation and Interest Rates
Following the release of the inflation data, Federal Reserve Chairman Jerome Powell indicated that the recent inflation figures align with the central bank’s expectations. This has increased market confidence that the Fed may adjust its monetary policy soon. The CME Group’s interest rate futures tool suggests that traders are now 70% confident that the Federal Reserve will initiate interest rate cuts during their June meeting.
Global Risk Sentiment and Geopolitical Developments
Geopolitical tensions continue to shape market dynamics. Russia has escalated attacks on Ukraine’s critical infrastructure in response to Ukrainian drone strikes on Russian oil facilities. Meanwhile, Hamas has accused the Israeli military of establishing dangerous zones in the Gaza Strip, further heightening tensions in the region.
Positive Economic Data from China Influences Market Sentiment
Global risk sentiment improved with positive news from China, where manufacturing sector growth was reported for the first time in six months. This development, coupled with the slight rise in the US dollar, has tempered the upward momentum of gold price forecast. Market participants now await the upcoming US ISM Manufacturing PMI data to gauge the potential impact on gold prices.
Technical Analysis: Gold Price Likely to Find Support Amidst Correction
From a technical standpoint, gold price forecast recently broke through the $2,200 level, reaching a new high of approximately $2,223. This rally attracted bullish interest, indicating a potential continuation of the upward trend in the near term. However, the daily Relative Strength Index (RSI) suggests that gold is currently “overbought,” indicating that prices may have risen too quickly. A short-term correction or consolidation is possible before the next upward move.
Despite the potential for a brief dip, gold prices are expected to target the $2,300 level. Should the price retrace, strong buying interest is likely to emerge around the $2,223 level, which should prevent a drop below $2,200. However, a sustained break below this key level could trigger further selling pressure, leading to additional declines in the gold price.
For more insights on daily gold trends, visit Daily Gold Signal. Stay updated with the latest Daily Gold Updates.
