Gold is weakening as high inflation fuels fears that the Federal Reserve will raise further rates to rein in inflation.
Sales continue under
cryptocoin.comAs you follow, gold futures continue the sell-off triggered by stronger-than-expected US inflation and consumer spending data in the previous session, testing a two-month low on Monday. The reports have raised fears that the Federal Reserve will raise rates longer than previously anticipated to rein in inflation.
Data on Friday showed US consumer spending rising 1.8% last month, the biggest increase since March 2021, after the personal consumption expenditures (PCE) price index, the Fed’s preferred measure of inflation, rose 0.2% in December. rose 0.6%.
Cleveland Fed Chair Loretta Mester added to the weakness when she said, “It will take more effort on the Fed’s part to keep inflation on the path to sustained declines to 2%.” Currently, money markets expect the Fed’s target rate to rise to 5.408 percent in September, from a range of 4.50% to 4.75%. This is up from 4.88% on 31 January and is the main reason for gold’s current sales.
Gold price technical analysis
Market analyst James Hyerczyk evaluates the technical outlook of gold as follows. According to the daily swing chart, the main trend is down. A trade at the intraday low of $1812.00 will signal a resumption of selling. A move above $1902.30 will turn the main trend up.
The minor trend is also down. A trade that breaks through the next minor bottom at $1,808.40 will reaffirm the downtrend. A move above $1856.40 will turn the minor trend up. This will shift the momentum upwards. The closest resistance is the long-term 50% level at $1,843.40.
Meanwhile, investors’ reaction to $1,817.10 will determine the direction of the April Comex gold futures contract on Monday.
Bear Scenario
A sustained move below $1,817.10 will signal the presence of sellers. If this continues to build up enough downside momentum then look for either a gradual break towards $1,749.60 or a downside acceleration. The cascading scenario is supported by a series of minor bottoms between $1,819.90 and $1,749.60.
Taurus Scenario
A sustained move above $1,817.10 will signal the presence of buyers. If this creates enough upside momentum, then look for a 50% increase at $1,843.40.
Additional notes to keep in mind
A close above $1,817.10 will see a reversal of the closing price. If confirmed by an ongoing rally, we could see the start of a 2- to 3-day countertrend rally with potential upside targets at $1,843.40, and $1,862.40.
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