- Gold price rises to $2,350 as US Dollar weakens following disappointing US Q1 GDP growth data.
- Investors await US core PCE inflation data for insights on potential Fed rate cuts.
- Market sentiment leans towards expectations of delayed rate cuts by the Fed.
Gold price (XAU/USD) has climbed to $2,350 in the European trading session on Friday amid anticipation of the release of the United States core Personal Consumption Expenditure Price Index (PCE) data for March, scheduled for 12:30 GMT.
The US core PCE inflation is expected to hold steady at 0.3% on a monthly basis, while the annual underlying inflation figure is projected to have eased to 2.6% from 2.8% in February. Higher-than-expected inflation numbers could diminish Gold’s attractiveness by raising the opportunity cost of investing in it. Conversely, indications of easing price pressures could bolster the Gold price by heightening expectations of earlier rate cuts by the Federal Reserve (Fed).
The US Dollar saw a slight uptick in trading on Friday, following a decline on Thursday prompted by lackluster US Q1 GDP growth figures, casting doubts on the economy’s ability to sustain its momentum in the coming quarters. The US Dollar Index (DXY), which monitors the currency against six major counterparts, hovers around 105.60.
Furthermore, despite a slight decrease to 4.69%, 10-year US bond yields remain near a five-month peak, as investors envisage the Fed postponing rate cuts until later in the year due to inflation progress stalling in reaching the 2% target.
Daily digest market movers: Gold price likely set for bearish weekly close
- Gold price approaches the critical resistance level of $2,350, benefitting from a weakening US Dollar following lower-than-anticipated US Q1 economic growth. With the economy expanding at an annual rate of 1.6%, below the anticipated 2.5% and previous 3.4%, concerns have arisen about the US economic outlook.
- Typically, a sharp downturn in GDP growth can stem from factors like subdued consumer spending, limited monetary stimulus, or reduced government expenditures. In theory, a weaker-than-expected GDP growth should heighten expectations for the Federal Reserve (Fed) to ease its tight monetary policy, maintained since the substantial pandemic-induced stimulus led to inflationary pressures.
- However, traders have been scaling back their expectations of Fed rate cuts due to persistently elevated GDP Price Index figures, a lagging inflation metric that rose from 1.7% to 3.1%. The CME Fedwatch tool shows a diminished likelihood of a rate cut in September, down to 59% from 69% a week prior.
- Investor focus now shifts to the US core PCE Price Index data for March, offering further insights on potential Fed interest rate adjustments. This inflation data will influence the Fed’s rate outlook leading up to the May 1 monetary policy meeting, where the central bank is widely expected to maintain interest rates within the 5.25%-5.50% range.
Technical Analysis: Gold price jumps to $2,350
Gold price has rebounded after finding buying interest near the 20-day Exponential Moving Average (EMA) around $2,315. The short-to-long-term outlook remains positive as EMAs for varying durations continue to trend higher.
Key support levels for Gold price include a three-week low near $2,265 and the high from March 21 at $2,223.
The 14-period Relative Strength Index (RSI) has dipped below 60.00, indicating a temporary halt to bullish momentum. Nevertheless, the overall upward bias remains intact as long as the RSI remains above 40.00.
Gold FAQs
Gold has been historically significant as a store of value and medium of exchange. Today, it is considered a safe-haven asset and a hedge against inflation and currency devaluation, making it attractive during economic uncertainty.
Central banks hold substantial amounts of Gold in their reserves to bolster currency strength during tumultuous periods. In 2022, central banks, especially those in emerging economies like China, India, and Turkey, significantly increased their Gold reserves.
Gold exhibits an inverse correlation with the US Dollar and US Treasuries, serving as a valuable diversification tool for investors during market volatility. Its price is influenced by various factors, including geopolitical events and interest rate movements.
Gold prices can fluctuate due to geopolitical tensions, economic recessions, interest rate changes, and currency movements, particularly the US Dollar. A strong Dollar tends to suppress Gold prices, while a weaker Dollar often boosts them.
- Gold price rises to $2,350 as US Dollar weakens following disappointing US Q1 GDP growth data.
- Investors await US core PCE inflation data for insights on potential Fed rate cuts.
- Market sentiment leans towards expectations of delayed rate cuts by the Fed.
Gold price (XAU/USD) has climbed to $2,350 in the European trading session on Friday amid anticipation of the release of the United States core Personal Consumption Expenditure Price Index (PCE) data for March, scheduled for 12:30 GMT.
The US core PCE inflation is expected to hold steady at 0.3% on a monthly basis, while the annual underlying inflation figure is projected to have eased to 2.6% from 2.8% in February. Higher-than-expected inflation numbers could diminish Gold’s attractiveness by raising the opportunity cost of investing in it. Conversely, indications of easing price pressures could bolster the Gold price by heightening expectations of earlier rate cuts by the Federal Reserve (Fed).
The US Dollar saw a slight uptick in trading on Friday, following a decline on Thursday prompted by lackluster US Q1 GDP growth figures, casting doubts on the economy’s ability to sustain its momentum in the coming quarters. The US Dollar Index (DXY), which monitors the currency against six major counterparts, hovers around 105.60.
Furthermore, despite a slight decrease to 4.69%, 10-year US bond yields remain near a five-month peak, as investors envisage the Fed postponing rate cuts until later in the year due to inflation progress stalling in reaching the 2% target.
Daily digest market movers: Gold price likely set for bearish weekly close
- Gold price approaches the critical resistance level of $2,350, benefitting from a weakening US Dollar following lower-than-anticipated US Q1 economic growth. With the economy expanding at an annual rate of 1.6%, below the anticipated 2.5% and previous 3.4%, concerns have arisen about the US economic outlook.
- Typically, a sharp downturn in GDP growth can stem from factors like subdued consumer spending, limited monetary stimulus, or reduced government expenditures. In theory, a weaker-than-expected GDP growth should heighten expectations for the Federal Reserve (Fed) to ease its tight monetary policy, maintained since the substantial pandemic-induced stimulus led to inflationary pressures.
- However, traders have been scaling back their expectations of Fed rate cuts due to persistently elevated GDP Price Index figures, a lagging inflation metric that rose from 1.7% to 3.1%. The CME Fedwatch tool shows a diminished likelihood of a rate cut in September, down to 59% from 69% a week prior.
- Investor focus now shifts to the US core PCE Price Index data for March, offering further insights on potential Fed interest rate adjustments. This inflation data will influence the Fed’s rate outlook leading up to the May 1 monetary policy meeting, where the central bank is widely expected to maintain interest rates within the 5.25%-5.50% range.
Technical Analysis: Gold price jumps to $2,350
Gold price has rebounded after finding buying interest near the 20-day Exponential Moving Average (EMA) around $2,315. The short-to-long-term outlook remains positive as EMAs for varying durations continue to trend higher.
Key support levels for Gold price include a three-week low near $2,265 and the high from March 21 at $2,223.
The 14-period Relative Strength Index (RSI) has dipped below 60.00, indicating a temporary halt to bullish momentum. Nevertheless, the overall upward bias remains intact as long as the RSI remains above 40.00.
Gold FAQs
Gold has been historically significant as a store of value and medium of exchange. Today, it is considered a safe-haven asset and a hedge against inflation and currency devaluation, making it attractive during economic uncertainty.
Central banks hold substantial amounts of Gold in their reserves to bolster currency strength during tumultuous periods. In 2022, central banks, especially those in emerging economies like China, India, and Turkey, significantly increased their Gold reserves.
Gold exhibits an inverse correlation with the US Dollar and US Treasuries, serving as a valuable diversification tool for investors during market volatility. Its price is influenced by various factors, including geopolitical events and interest rate movements.
Gold prices can fluctuate due to geopolitical tensions, economic recessions, interest rate changes, and currency movements, particularly the US Dollar. A strong Dollar tends to suppress Gold prices, while a weaker Dollar often boosts them.
