Gold’s Rebound Halted Amid Rate-Cut Uncertainty and US Data
Gold‘s recent recovery, with a significant intraday rise of around $40 from a two-week low, was curtailed as it approached the $2,064 region. The recovery lost momentum due to uncertainties about the Federal Reserve’s interest rate cut trajectory, impacting traders’ directional bets on the non-yielding metal.
Investors are reassessing their expectations for aggressive policy easing by the Fed amid signs of a resilient US economy and recent hawkish comments from Federal Open Market Committee (FOMC) members. This reassessment supports higher US Treasury bond yields, creating headwinds for the US Dollar (USD) and exerting downward pressure on gold prices at the start of the week. However, the subdued risk appetite may limit gold’s losses.
Concerns about China’s slow economic recovery and escalating Middle Eastern geopolitical tensions continue to affect market sentiment, as evidenced by the weaker equity markets, which could lend support to GOLD as a safe-haven asset.
Traders await the release of the latest US consumer inflation data on Thursday for further cues. The upcoming speech by Atlanta Fed President Raphael Bostic and US bond yields will also influence the GOLD market, with the mixed fundamental backdrop suggesting caution before anticipating a continuation of the recent downtrend.
Recent strong US economic data, including better-than-expected job additions and factory orders, alongside hawkish remarks from Dallas and Richmond Fed Presidents, are affecting market expectations of the Fed’s policy direction. The 10-year US government bond yield remains above 4.0%, supporting the USD and impacting GOLD prices. Nevertheless, markets anticipate a potential rate cut by the Fed in March, with further cuts expected throughout 2024.
Gold Technical Outlook
The GOLD price has experienced a bearish bounce after testing the 2065.70 level, now settling below the 50-day EMA. This situation maintains a bearish trend in the short term, with a potential test of the 2016.90 level.
A breach of this level could lead to further correction, with a subsequent target at 1977.46. The market awaits further decline, noting that surpassing 2065.70 could halt the negative trend and potentially reignite the primary bullish trajectory.
Expected Trading Range: 2015.00 support – 2055.00 resistance
Trend Prediction: Bearish for the day
Gold Live Chart
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