The Gold Spot Price (XAUUSD) has been an intriguing asset to watch, with a modest year-to-date gain of just over 2%, rebounding from prior losses that nearly doubled its current uptick.
Notably, the metal has recorded back-to-back weeks of gains, with the current week maintaining the upward momentum. This surge is underpinned by market expectations of impending interest rate cuts, driven by a cooling inflation rate of 2.4% in February in the United States.
The recent decline in the dollar and Treasury yields, coupled with weakening U.S. economic data, further bolstered gold’s appeal as a safe-haven asset. Additionally, mounting anticipation of rate cuts by the U.S. Federal Reserve, potentially in June, after delays in March and May, continues to buoy the non-yielding metal. With US manufacturing on a downward trend and inflation gradually easing, gold remains a focal point for investors seeking stability amidst uncertain economic conditions.
Technical
The Gold Spot Price has been exhibiting a noteworthy uptrend, marked by four consecutive days of gains. This surge follows a breakout above a descending channel pattern, indicating a reversal from the previous period of downside momentum.
Moreover, the spot price currently sits comfortably above its 100-day moving average, underscoring the strength of the bullish trend. A key support level at 1984.24 has played a pivotal role in bolstering the upward momentum, as demand outweighed supply in the market. As the spot price approaches its three-month high of 2143.31, which serves as a resistance level, investors are closely monitoring for a potential retest.
A breach of this resistance level could signal further gains if upside momentum persists. Conversely, in the event of a downturn, attention may turn to the aforementioned support level as a crucial point of interest to the downside.
Summary
The Gold Spot Price is poised for a potential rebound, supported by consecutive weeks of gains and a strong uptrend. With key technical levels indicating bullish momentum, investors remain attentive to a possible breach of the resistance level at 2143.31 for further upside potential.
Sources: U.S. Bureau of Economic Analysis, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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