Gold (XAU/USD) Rebounds as CPI Fuels Rate Cut Speculation: A $2160 Pivot Point Analysis

The current landscape for gold (XAU/USD) price prediction is intriguing as it witnessed a modest recovery during the Asian session on Wednesday, clawing back some of the previous session’s losses, which took it down to a weekly low of $2,150, marking a 0.06% uptick to $2160.33.

The catalyst for Tuesday’s dip—a slightly higher-than-expected US consumer inflation report for February—pushed US Treasury bond yields up, strengthening the US Dollar (USD) and placing downward pressure on gold. Moreover, a rally in US equity markets drew investments away from this safe-haven asset.

Speculations on Federal Reserve Interest Rate Cuts

Even with the uptick in yields and the USD, the market still largely bets on the Federal Reserve commencing rate cuts by the June policy meeting. This expectation keeps a cap on yields and the greenback, providing a buffer for gold prices.

Traders, cautious of geopolitical tensions and potential global economic slowdowns in 2024, are hesitant to take aggressive bearish stances on XAU/USD. The upcoming FOMC meeting next week is another reason for market participants to adopt a wait-and-see approach.

Inflation Reports and Market Dynamics

Tuesday’s inflation report, which saw the headline US CPI increasing by 3.2% YoY for February—above both the previous and expected 3.1%—and the Core CPI at 3.8%, slightly higher than the 3.7% forecast, sparked discussions about the Federal Reserve’s rate cut timeline.

The markets still have a roughly 70% chance of a rate reduction in June, according to the CME Group’s FedWatch tool, highlighting the complex interplay between inflation data and Federal Reserve policies.

Geopolitical Events and Upcoming Economic Data

Recent geopolitical events, including escalations between Israel and Hamas and heightened military actions by Houthi rebels in Yemen, underscore Gold’s appeal as a safe-haven asset.

With a light US economic calendar today, investors are gearing up for Thursday’s data releases, including Core PPI m/m expected at 0.2% (previous 0.5%), Core Retail Sales m/m anticipated at 0.5% (from -0.6%), PPI m/m forecasted at 0.3% (steady from 0.3%), Retail Sales m/m projected at 0.8% (down from -0.8%), and Unemployment Claims estimated at 218K (previous 217K).

As Gold navigates through inflation expectations, geopolitical risks, and the Fed’s forthcoming policy meeting, these figures will critically inform market sentiment, highlighting the intertwined nature of macroeconomic indicators, central bank decisions, and geopolitical developments in shaping the Gold (XAU/USD) price forecast.

Gold (XAU/USD) Price Forecast: Technical Outlook

Today’s GOLD (XAU/USD) price slightly increased by 0.06%, reaching $2160.33. The market is currently hovering around a pivotal level of $2156, suggesting potential for upward momentum. Resistance levels are identified at $2197, $2227, and $2252, indicating possible future highs.

Conversely, support at $2131, $2111, and $2090 offers critical thresholds to sustain any pullbacks. The Relative Strength Index (RSI) stands at 49, near the midpoint.

At the same time, the 50-day Exponential Moving Average (EMA) at $2138.27 supports a bullish outlook, especially considering the presence of a Doji candle above the $2130 level, which corresponds to the 23.6% Fibonacci retracement.

This technical setup points towards a bullish trend above $2156, with a break below this level likely leading to a notable decline.