Gold price (XAUUSD) maintains its strength above $2,200 in Thursday's late European session, demonstrating resilience ahead of the United States core Personal Consumption Expenditure (PCE) Price Index data for February, slated for Friday release. Market sentiment remains cautious as investors await crucial economic indicators.
The Federal Reserve (Fed) is closely monitoring the PCE data, as it could influence the central bank's decision on interest rates. A report indicating persistent price pressures might prompt the Fed to temper rate cut expectations, potentially boosting yields on interest-bearing assets like Treasury bonds. Conversely, softer inflation figures could bolster expectations for a rate cut in the June meeting, aligning with the narrative of potential rate adjustments in 2024.
Maintaining a cautious stance on rate cuts, the Fed aims to strike a delicate balance to avoid exacerbating inflationary pressures or unduly pressuring the labor market and the broader economy. Meanwhile, the US Dollar Index (DXY) hits a six-week high at 104.72, reflecting market apprehension ahead of the release of the Fed's preferred inflation gauge.
In the daily digest of market movers, gold price climbs above $2,200 amid anticipation of the US core PCE Price Index data. Fed policymakers' hawkish rhetoric may persist if inflation remains stubborn, potentially weakening gold's appeal due to increased opportunity costs.
From a technical perspective on the 1-hour timeframe, XAUUSD shows volatility during the London trading session, evidenced by expanding Bollinger bands. The bullish trend, indicated by the EMA 50 floating above EMA 200 since February 19th, remains intact. Strong momentum is evidenced by bullish oscillator indicators, with RSI trading above 40% and MACD signal line hovering high above the 0 line. Key support levels to watch include the bottom side of the value area at $2161 and the EMA 200.
Overall, XAUUSD maintains a short-term bullish outlook, with potential for market dynamics to shift based on the impending US economic data and Fed policy considerations.
Forecast -0.2% vs Previous 0.3%
Forecast -3.2% vs Previous 4.9%
Forecast 45.9 vs Previous 44.0
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