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Gold Price Forecast: $2035 Pivot as US PCE Data Looms; Buy Now?

The gold price (XAU/USD) experienced a modest increase to $2035 in the Asian trading session on Thursday, aiming to extend the slight recovery from the weekly low of $2,025. Despite this uptick, the precious metal remains beneath the significant resistance zone of $2,040-$2,042.

Gold Price Chart - Source: Tradingview

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Market participants are now poised for the upcoming US Personal Consumption Expenditures (PCE) Price Index data. This critical inflation indicator is expected to shed light on the Federal Reserve’s potential rate-cut trajectory, significantly influencing the future direction of the non-yielding yellow metal.

Strategic Positioning Amid Uncertain Conditions

As the financial community braces for the pivotal data release, there’s a noticeable hesitation among US Dollar (USD) investors, providing a temporary boost to gold prices. Additionally, a subtle shift towards risk aversion globally further supports the appeal of gold as a safe-haven asset.
However, the prevailing sentiment that the Federal Reserve might maintain elevated interest rates for an extended period could limit any substantial gains for gold.
Investors are advised to seek strong buying momentum before committing to positions anticipating continuing Gold’s recent recovery from the year-to-date low of $1,984, recorded earlier in February.

Fed Officials’ Remarks and Economic Data Influence

The market’s cautious stance is further compounded by anticipation of the US inflation figures, which have diminished the appetite for riskier assets, buoying gold prices amidst a slight decline in the US dollar.
Recent statements from Federal Reserve officials underscore the ongoing battle against inflation, suggesting that interest rates will remain high to ensure economic stability:
  • New York Fed President John Williams hinted at rate cuts in the second half of 2024, emphasizing the uneven path towards the 2% inflation target.
  • Atlanta Fed President Raphael Bostic advocated for patience before adjusting policies, indicating that the fight against inflation is far from over.
  • Boston Fed President Susan Collins suggested the possibility of rate reductions within the year, albeit with a cautious approach to policy changes.
Moreover, the latest US GDP growth data for Q4 indicated a 3.2% expansion, slightly below the initial estimate but still reflective of a robust economy. This data reinforces expectations of a hawkish Federal Reserve stance, potentially restraining further appreciation in gold prices ahead of the critical US PCE Price Index release.
Additionally, Thursday’s economic calendar, featuring Weekly Initial Jobless Claims, the Chicago PMI, Pending Home Sales, and further commentary from Fed officials, is poised to influence market dynamics significantly.

Gold Price Forecast: Technical Outlook

 GOLD (XAU/USD) is currently priced at $2035, reflecting a modest uptick within the Asian session. The green trendline on the chart indicates the pivot point, which is at $2028. Immediate resistance levels are at $2040, $2053, and $2065, which are critical for bulls to overcome.
Gold Price Chart
Support levels below the pivot are at $2025, $2020, and $2016, providing downside protection. The RSI indicator reads at 55, suggesting a neutral to slightly bullish sentiment. The 50 EMA is positioned at $2028, offering dynamic support that coincides with the pivot point, potentially underpinning the price.
Observing the double-top pattern near the $2040 level, a decisive breakout above this could dictate the next directional move for gold. The overall trend remains cautiously bullish above the $2030 level, with a break above $2040 potentially signifying further bullish momentum.
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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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