GOLD competing against US PCE data
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The U.S. dollar edged higher today, but displayed measured strength amid subdued U.S. Treasury yields. A sense of caution permeated markets as traders anxiously awaited the looming release of the core PCE deflator, the Federal Reserve’s preferred inflation gauge. This economic report can greatly influence the central bank’s monetary policy outlook so it could bring volatility in the days ahead.
Forecasts suggest that January's core CPI rose 0.4% m-o-m, resulting in a slight deceleration in the yearly print from 2.9% to 2.8%, a baby step in the right direction. In any case, the substantially higher-than-anticipated CPI and PPI readings for the same period underscore a key point: investors may be underestimating inflation risks, leaving them vulnerable to an upside surprise in tomorrow’s data.
A hot PCE report indicating minimal progress on disinflation may prompt Wall Street to scale back bets on the number of rate cuts envisioned for 2024, while increasing the odds of the FOMC delaying its easing cycle to the second half of the year. A hawkish repricing of interest rate expectations should exert upward pressure on U.S. Treasury yields, boosting the U.S. dollar but weighing on gold prices.
TECHNICAL ANALYSIS
XAUUSD
Gold rose on Wednesday but encountered resistance around the $2,035 mark, a key technical roadblock where a downtrend line converges with the 50-day simple moving average. Sellers need to firmly protect this ceiling to thwart bullish momentum; any lapse could trigger an upward surge towards $2,065.
Alternatively, if sentiment shifts back in favor of sellers and XAU/USD takes a turn to the downside, the first key floor to watch emerges at $2,005, near the 100-day simple moving average. Should selling pressure continue, traders may eye $1,990, followed by $1,995 as potential support levels.
Forecasts suggest that January's core CPI rose 0.4% m-o-m, resulting in a slight deceleration in the yearly print from 2.9% to 2.8%, a baby step in the right direction. In any case, the substantially higher-than-anticipated CPI and PPI readings for the same period underscore a key point: investors may be underestimating inflation risks, leaving them vulnerable to an upside surprise in tomorrow’s data.
A hot PCE report indicating minimal progress on disinflation may prompt Wall Street to scale back bets on the number of rate cuts envisioned for 2024, while increasing the odds of the FOMC delaying its easing cycle to the second half of the year. A hawkish repricing of interest rate expectations should exert upward pressure on U.S. Treasury yields, boosting the U.S. dollar but weighing on gold prices.
TECHNICAL ANALYSIS
XAUUSD Gold rose on Wednesday but encountered resistance around the $2,035 mark, a key technical roadblock where a downtrend line converges with the 50-day simple moving average. Sellers need to firmly protect this ceiling to thwart bullish momentum; any lapse could trigger an upward surge towards $2,065.
Alternatively, if sentiment shifts back in favor of sellers and XAU/USD takes a turn to the downside, the first key floor to watch emerges at $2,005, near the 100-day simple moving average. Should selling pressure continue, traders may eye $1,990, followed by $1,995 as potential support levels.
Note
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Note
The world gold spot price is around 2,082 USD/ounce, a sharp increase of over 38 USD/ounce compared to yesterday morning's trading session. World gold prices soared sharply compared to the previous session, after major economies in the world, including the US, announced a series of less positive economic information.Note
Fed's Daly: AI can improve business outcomes and reduce inequality.Fed Daly: did not comment on the monetary policy outlook in his remarks about AI in New York City.
Note
Traders should watch the upcoming February U.S. jobs data for insights into the market's direction. Strong job numbers would decrease chances of rate cuts and could lower gold prices. However, if job figures disappoint, interest rate expectations may become more dovish, benefiting precious metals.
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