Gold prices, represented by XAU/USD, have caught the attention of some buyers near the $2,320 mark and have been on the rise for the third day in a row on Monday. However, the increase in price during the day lacks strong confidence from bullish investors. This hesitation among buyers comes as they believe the Federal Reserve (Fed) might delay cutting interest rates. One reason for this belief is the ongoing issue of inflation, which is still higher than desired. This belief was reinforced by the release of the US Personal Consumption Expenditures (PCE) Price Index on Friday. Additionally, the overall positive mood in the stock markets is also contributing to less demand for gold, which is considered a safe-haven asset.
The US Dollar (USD) is facing some selling pressure because the Japanese Yen (JPY) is getting stronger, which is making the dollar weaker. This has caused the dollar to reach a low point that hasn’t been seen in two weeks. Along with this, ongoing tensions in different parts of the world, like the Russia-Ukraine conflict and the Israel-Hamas conflict, are making investors more interested in safe-haven assets like gold. Safe-haven assets are things that investors turn to during times of uncertainty because they are considered safer investments. Despite these factors, the overall situation is a bit uncertain, so it’s important for investors to be cautious when making decisions about buying or selling gold against the US dollar (XAU/USD). This caution is especially important as we approach important events like the Federal Open Market Committee (FOMC) meeting and key economic reports from the US, such as the Nonfarm Payrolls (NFP) report.
Daily Digest: Gold Price Supported by Weaker USD, Lacks Strong Follow-Through Buying
- The US Bureau of Economic Analysis reported that in March, the Personal Consumption Expenditures (PCE) Price Index increased by 0.3%. The yearly rate also rose to 2.7% from 2.5% in February, surpassing the estimated reading of 2.6%.
- Meanwhile, the core PCE Price Index, which excludes volatile food and energy prices, remained steady at 2.8%, compared to the expected 2.6%. This reinforces the Federal Reserve’s hawkish expectations and puts pressure on gold prices, which do not yield interest.
- Talks for peace between Israel and Hamas in Cairo are boosting optimism for reducing tensions in the Middle East. This encourages investors to seek riskier assets, diverting flows away from safe-haven gold.
- Despite this, Ukraine’s attacks on more Russian oil refineries and its request for additional military aid from the US due to worsening conditions on the front lines keep geopolitical risks active and support the XAU/USD pair.
- Moreover, evidence showing that inflation in the US is not easing as anticipated should support gold, which is considered a hedge against inflation, especially ahead of the critical two-day FOMC monetary policy meeting beginning on Tuesday.
- This week, investors will also face the release of significant US macroeconomic data at the start of the new month, including the highly anticipated Nonfarm Payrolls (NFP) report on Friday.
Technical Analysis: Gold Price Stuck in Familiar Range as Traders Show Little Commitment
In simpler terms, last week, the gold price went up from below $2,300 but stopped increasing around $2,352-2,353. This level is important because it’s a combination of the halfway point in the recent drop from the highest price ever and a certain kind of average of prices over 200 hours. After that, the price of gold went down again but didn’t go down too much and stopped around $2,320. This $2,320 price is important now because it’s like a turning point. If the price stays above this point, it might go up again. But if it goes below $2,320 and stays there, it could go down to around $2,292-2,291, and then maybe even lower to around $2,268-2,265.
Simply put, if the bulls want to make more money, they need to wait until the gold price goes above $2,352-2,353. Once it does, it could keep going up towards $2,371-2,372, and even reach $2,400. If the momentum continues, it might even go higher, reaching the highest price ever around $2,431-2,432, like it did earlier this month.
