Gold Bulls on Hold as Key Inflation Data Looms

Gold prices (XAUUSD) are currently treading water, caught between potential upside from dovish central bank policy and downside pressure from a strengthening dollar. Recent comments from the European Central Bank hinting at the possibility of rate cuts in June and July have buoyed gold’s appeal as a safe-haven asset. Additionally, a survey last Friday showed US consumers expecting slower price increases, raising hopes that this week’s key inflation data (core PCE) will confirm a cooling trend. Lower inflation could prompt the Federal Reserve to ease its monetary tightening stance, potentially weakening the dollar and supporting gold prices. 

However, this optimistic outlook is countered by a few headwinds. The recent rise in the dollar, fueled by shifting expectations of US monetary policy, has dampened gold’s appeal. While a rate cut remains a possibility, some traders are sceptical that the Fed will cut rates more than once this year. This scepticism is reflected in current market pricing, with a roughly 63% chance of a rate cut by November priced in. As gold offers no yield, rising interest rates make it a less attractive investment compared to interest-bearing assets. 

Technical Analysis 

On the 4-hour chart, gold is trading slightly lower at $2,343.61 per ounce, following a retracement from recent highs. The price action has seen gold dip below key moving averages, the 50-SMA (blue line) and 100-SMA (orange line), and is currently oscillating around the 20-SMA (green line). 

A potential upside scenario could see a recovery towards the 23.60% Fibonacci retracement level at $2,380.90/ounce. A sustained break above this resistance could lead to a retest of the all-time high at $2,450.04/ounce. 

Conversely, a breakdown below the 20-SMA and the 38.20% Fibonacci retracement level could trigger a deeper retracement towards the 50.00% Fibonacci retracement level at $2,303.57/ounce. A confirmed bearish breakout, indicated by significant volume, could expose lower levels of support at the 61.80% Fibonacci retracement ($2,269.00/ounce) and the 78.60% Fibonacci retracement level ($2,219.78/ounce). 


The near-term direction of gold hinges on the upcoming US inflation data. A dovish report indicating cooler inflation could reignite hopes of rate cuts and bolster gold prices. Conversely, a hawkish report suggests persistent inflation might lead the Fed to maintain or even increase interest rates, putting downward pressure on gold.  

Sources: TradingView, Trading Economics, Reuters, Dow Jones Newswire. 

Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst 

Disclaimer: Trive South Africa (Pty) Ltd (hereinafter referred to as “Trive SA”), with registration number 2005/011130/07, is an authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002. Trive SA is authorised and regulated by the South African Financial Sector Conduct Authority (FSCA) and holds FSP number 27231. Trive Financial Services Ltd (hereinafter referred to as “Trive MU”) holds an Investment Dealer (Full-Service Dealer, excluding Underwriting) Licence with licence number GB21026295 pursuant to section 29 of the Securities Act 2005, Rule 4 of the Securities Rules 2007, and the Financial Services Rules 2008. Trive MU is authorized and regulated by the Mauritius Financial Services Commission (FSC) and holds Global Business Licence number GB21026295 under Section 72(6) of the Financial Services Act. Trive SA and Trive MU are collectively known and referred to as “Trive Africa”.

Market and economic conditions are subject to sudden change which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. Trive Africa and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered. Please consider the risks involved before you trade or invest. All trades on the Trive Africa platform are subject to the legal terms and conditions to which you agree to be bound. Brand Logos are owned by the respective companies and not by Trive Africa. The use of a company’s brand logo does not represent an endorsement of Trive Africa by the company, nor an endorsement of the company by Trive Africa, nor does it necessarily imply any contractual relationship. Images are for illustrative purposes only and past performance is not necessarily an indication of future performance. No services are offered to stateless persons, persons under the age of 18 years, persons and/or residents of sanctioned countries or any other jurisdiction where the distribution of leveraged instruments is prohibited, and citizens of any state or country where it may be against the law of that country to trade with a South African and/or Mauritius based company and/or where the services are not made available by Trive Africa to hold an account with us. In any case, above all, it is your responsibility to avoid contravening any legislation in the country from where you are at the time.

CFDs and other margin products are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how these products work and whether you can afford to take the high risk of losing your money. Professional clients can lose more than they deposit. See our full Risk Disclosure and Terms of Business for further details. Some or all of the services and products are not offered to citizens or residents of certain jurisdictions where international sanctions or local regulatory requirements restrict or prohibit them.