Gold price is currently sitting at four-week highs of $2,051, showing signs of a second consecutive weekly gain. The US Dollar is struggling as Treasury yields soften after disappointing US Core PCE inflation data. Gold price broke out of a pennant pattern on the daily chart on Thursday, indicating potential for further upside.
The consolidation near the $2,051 level suggests that Gold is gearing up for another push higher, fueled by the weakening US Dollar and Treasury bond yields. Positive data from China’s National Bureau of Statistics (NBS) and Caixin showing improved activity in the country’s services and manufacturing sectors have also supported Gold prices.
The recent release of the US PCE Index, which met expectations but showed a slight decrease in January, briefly weakened the USD and pushed Gold above the $2,050 threshold. However, hawkish comments from Fed policymakers limited the upside potential for Gold.
Looking ahead, the focus is on the US ISM Manufacturing PMI data to provide further direction for Gold prices. Market participants are closely monitoring the Fed’s stance on interest rate cuts, with current probabilities suggesting a rate cut is more likely in June than in May.
From a technical analysis perspective, Gold price confirmed an upside break from a symmetrical triangle pattern and closed above the key resistance level of $2,034. The RSI indicator suggests there is room for further upside, with the immediate resistance seen at $2,051. On the downside, support levels are at $2,041 and $2,034, with potential challenges at the 50-day and 21-day SMAs.
In addition to the technical and fundamental factors impacting Gold prices, it is important to note that Gold is widely considered a safe-haven asset, especially during times of economic uncertainty or geopolitical turmoil. Central banks are significant holders of Gold, using it as a hedge against inflation and currency depreciation.
Overall, the current market conditions and economic data suggest that Gold price could continue its upward momentum, but key levels and external factors must be carefully monitored for potential reversals or further gains.
