Spot gold has been pulled back slightly after the stronger-than-expected US GDP data dampened hopes that the Fed can turn less hawkish in the near future.
The resilience shown in the world’s largest economy may pave the way for the Fed to persist with its ultra-aggressive stance in its battle against inflation.
Gold’s pullback isn’t just due to the slight rebound in the US dollar and in US yields, but also because of technical factors.
Bullion has cleared some of the froth in prices, with its 14-day relative strength index now back below the 70 threshold which denotes “overbought” conditions.
Such price action however may have cleared more room to the upside, depending on how markets react to the Fed’s incoming clues next week.
Policy signals from the upcoming FOMC meeting may either validate gold’s recent gains or greatly disappoint bullion bulls.
If the Fed signals its persistence to send its benchmark rates past the market-forecasted 5%, that may unwind some of the precious metal’s year-to-date advances and drag it back closer to the psychologically-important $1900 mark.
Should the Fed’s policy bias align closer to market expectations that peak US rates may be at hand, that should encourage bullion bulls to resume their hunt for $2k gold over the near term.
Gold’s recent crawl back up closer to $2k is awaiting validation from the US PCE core deflator due later today. Further evidence of still-sticky US inflation, with another 4.7% print that matches January’s number, may force bullion bulls to wait a while longer before reclaiming the $2k handle.
31 March 12:24
Spot gold is once again easing away from the $2000 handle, after having twice this week briefly surfaced above that psychologically-important mark. From a technical perspective, gold appears to be clearing even more froth as its 14-day relative strength index pulls back once more from the 70 threshold which marks “overbought” conditions.
24 March 12:19
Gold has broken above the psychologically-important $2k for the first time since March 2022 (following Russia’s invasion of Ukraine)! And gold could stay supported this week, as major central banks hold their respective policy meetings amid the market tumult and banking crisis engulfing both sides of the Atlantic.
20 March 10:41
Spot gold has skyrocketed towards its biggest weekly gain since November as contagion fears permeated global financial markets this week. The Credit Suisse crisis exacerbated the risk-off sentiment stemming from Silicon Valley Bank’s collapse, prompting market participants to rush towards safe haven assets.
17 March 12:00
A lower-than-expected NFP headline figure today, which suggests that January’s blockbuster number was a fluke, is likely to restore spot gold back above $1850. However, a stronger-than-expected February NFP print which ramps up market fears for an even-more aggressive Fed may drag spot gold back closer to the $1800 mark.
10 March 12:34
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