Gold Price Outlook: $2,040 Resistance, Fed Decisions, and CPI Impact
During Thursday’s Asian session, GOLD (XAU/USD) experienced a halt in its recent downturn, stabilizing near the $2,040-2,042 region. Despite this, the precious metal continues to trade within a narrow range, not far from its multi-week low established on Monday.
Investors are cautiously observing the Federal Reserve’s potential rate cut trajectory, with significant attention on the upcoming US consumer inflation data.
The US dollar remains range-bound due to uncertainty over the Fed’s interest rate reduction timeline.
This ongoing ambiguity, coupled with global geopolitical tensions and China’s economic challenges, provides some support for gold’s safe-haven appeal. However, the market is adjusting its expectations for the Fed’s policy easing, given the resilience of the US economy, which supports higher US Treasury yields and limits Gold’s advances.
Gold’s current positive momentum is partly due to market adjustments ahead of the US inflation figures. The market initially reacted to the Fed’s dovish stance in December, anticipating substantial rate cuts by 2024. However, robust US economic indicators and mixed messages from Fed officials have led to a reassessment of these aggressive easing expectations.
New York Fed President John Williams recently remarked that the central bank is in a good position, with time to deliberate future rate strategies, suggesting a return to more neutral levels. The 10-year US government bond yield, maintaining above 4%, caps potential gains in gold as investors await key CPI data, which could significantly influence the Fed’s rate decisions.
Today’s CPI is expected to show a modest increase, potentially influencing the Fed’s interest rate policy.
A lower-than-expected CPI could signal rate cuts and weaken the dollar, favouring gold. Conversely, a higher CPI might prolong higher interest rates, strengthening the Dollar and pressuring GOLD prices.
Gold Technical Outlook
Technically, GOLD is showing a slightly bullish bias, with a focus on the 2016.90 level within a minor bearish channel. A break below this level could lead to further bearish movement towards 1977.46.
The trend remains bearish, supported by the EMA50, with a breach of 2044.85 potentially leading to an intraday rally towards the crucial 2065.70 resistance before any decline.
Today’s expected trading range lies between $2010.00 support and $2040.00 resistance, with a bearish trend forecast for the session.
Gold XAU Live Chart
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