Gold Prices Struggle to Break Resistance at $2,020
Gold prices have reached a significant Resistance level of $2,020 during the Tokyo trading session but have encountered Resistance in their upward momentum. However, the precious metal's upward inclination remains strong amid the effects of the US inflation slowdown, which are expected to persist. Despite the reduced US Consumer Price Index (CPI), the possibility of successive rate hikes by the Federal Reserve (Fed) has not been eliminated, and the US Dollar Index (DXY) has managed to hold its ground after dipping to a key low of 101.44.
Despite the struggle posed by the uncertainty surrounding the Fed's monetary policy decisions and the possibility of rate hikes, gold's upward momentum remains strong amid the US inflation slowdown. It is currently facing resistance at $2,020, but it could potentially break through this level in the future. As a safe haven asset, gold continues to be an attractive option for investors seeking to hedge against inflation and other risks in these uncertain times.
Fed Rate Hike Speculation Remains High Amid US Inflation Slowdown
According to the CME Fed watch tool, there is a more than 68% likelihood of a 25 basis point rate hike in the upcoming May monetary policy meeting. Late Wednesday, San Francisco Fed Bank President Mary Daly stated that there is a lot more in the pipeline of monetary policy tightening. The US inflation report shows that headline inflation has declined more than anticipated to 5.0%, largely due to weaker gasoline prices. However, core CPI has risen to 5.6%, suggesting that core inflation may remain persistently high in the future.
S&P 500 Futures Rise Following Bearish Close on Wednesday
S&P 500 futures have continued to rise following a bearish close on Wednesday, signaling a rebound in risk appetite. The reduced US Consumer Price Index (CPI) has not eliminated the possibility of successive rate hikes by the Federal Reserve (Fed), and the US Dollar Index (DXY) has managed to hold its ground after dipping to a key low of 101.44.
Oil Prices Surge Following OPEC+ Decision to Cut Production
Investors are mindful that oil prices have experienced a significant surge in April following OPEC+’s unexpected decision to cut production, which could hamper the GOLD bull’s momentum. A closer look at the US inflation report reveals that headline inflation has declined more than anticipated to 5.0%, largely due to weaker gasoline prices. However, core CPI has risen to 5.6%, suggesting that core inflation may remain persistently high in the future.
Gold Technical Analysis Suggests Continued Bullish Trend
Gold prices are trading within a symmetrical triangle chart pattern on an hourly basis, demonstrating a sharp reduction in volatility following dramatic price swings. The ascending trendline of the pattern starts from a low of $1,985, while the descending trendline originates from a high of $2,030. The 20-period Exponential Moving Average (EMA) at $2,015 supports gold bulls, and the Relative Strength Index (RSI) remains in a buying zone, above 50, reinforcing the likelihood of a continued bullish trend. Gold's immediate resistance lies at $2,024, with support around $2,012.
Forex traders closely monitor gold prices as they are highly correlated with the US dollar. Gold is often used as a hedge against inflation and a safe-haven asset during times of economic uncertainty. Forex traders can use technical analysis tools, such as trendlines, moving averages, and the Relative Strength Index (RSI), to identify potential trading opportunities in the gold market. In today's market, the reduced US Consumer Price Index (CPI) and the possibility of successive rate hikes by the Federal Reserve (Fed) have influenced gold prices. Forex traders should stay updated on the latest economic indicators and central bank policies to make informed trading decisions in the gold market.
source: fxleaders