The price of gold has been steadily climbing, reaching 2351.00 USD per troy ounce recently. This increase comes after a period of stagnant movement, signaling a resurgence in interest from investors. One of the main reasons for this surge in gold prices is the weakening of the US dollar. Investors are eagerly awaiting the release of crucial US inflation data later in the week, with particular focus on the Core PCE indicator scheduled for Friday. This data is expected to shed light on the Federal Reserve’s potential interest rate adjustments, which could have a significant impact on the market.
The upcoming US inflation data will likely be a key driver of movements in gold prices, as it could provide clarity on the Federal Reserve’s stance on interest rates. While recent minutes from the Fed hint at a possible rate hike due to persistent inflation, market sentiment leans towards a more dovish approach in the future. This is evident from the positive trend in short-term futures contracts on gold, suggesting that investors are anticipating a possible easing of the Fed’s stance.
Looking at the technical analysis of XAU/USD, we can see some interesting patterns. On the H4 chart, a second downward impulse towards the 2340.00 level has been observed, followed by a correction to 2358.50. A potential downside movement to 2341.44 is expected, which could lead to a consolidation phase. If the price breaks out of this range upwards, a further correction towards 2384.80 could be on the cards. Conversely, a downward breakout could result in a decline to 2318.80, the initial target of the decline wave. The MACD indicator supports this scenario, with its signal line pointing downwards.
On the H1 chart, a decline to 2325.40 was followed by a growth structure up to 2342.31. A consolidation range has formed around this level, with a correction wave to 2358.50. A potential downward breakout from this range may lead to another downward impulse to 2318.85. On the other hand, an upward breakout could see the price continuing its correction to 2384.85. The Stochastic oscillator confirms this outlook, with its signal line on a downward trajectory.
The rise in gold prices can be attributed to the weakening US dollar and anticipation of key US inflation data. Technical indicators point towards potential corrections and further declines in gold prices, with specific support and resistance levels to keep an eye on. Investors are eagerly awaiting the release of critical data this week to gain more insight into the Federal Reserve’s intentions regarding interest rates.