The gold price regained some of the previous day’s losses on Thursday. Now, all eyes are on the Producer Price Index (PPI) data. Additionally, the market will carefully follow the speeches of US Federal Reserve (Fed) policy makers.
Despite the hot US CPI, the gold price is resilient!
cryptokoin.comAs you follow from , the gold price saw a strong rise in April. This rise was catalyzed by the recent decline in the US Dollar along with US Treasury bond yields. However, the warm US CPI was a headwind for gold. According to the latest data, US CPI increased by 0.4% on a monthly basis in March. Thus, it exceeded the estimates of 0.3%. Additionally, monthly Core CPI increased by 0.4% in the same period, exceeding expectations of 0.3%. Annual headline CPI increased by 3.5% against the market estimate of 3.4%.
The hot US CPI poured cold water on the Fed’s interest rate cuts in June. Markets price the probability of the Fed lowering interest rates in June at only 18%. This probability was around 52% before the data was released. Following the US CPI data, the gold price dropped sharply to $2,320. However, it later made a good comeback on Wednesday, closing at $2,334. Escalating geopolitical tensions in the Middle East are helping the recent recovery in the gold price. That’s why it currently supports safe haven identity gold.
Now the market is waiting for the US PPI and ECB interest rate decisions
Looking ahead, geopolitical tensions are increasing. According to analysts, it is possible for prices to continue their upward trend if investors turn to the security of gold. However, US PPI data and European Central Bank (ECB) policy statements may reveal risks to the gold price recovery. The market expects the ECB to keep borrowing costs at record levels. But the focus will be on whether officials will signal a rate cut in June.
The ECB’s hawkish stance, implying that the central bank may keep its policy tight for a longer time, may strengthen the selling interest around the gold price. Because high interest rates reduce the appeal of holding non-returnable gold.
Gold price technical analysis: There is room for further upside!
Market analyst Dhwani Mehta evaluates the technical picture of gold. As we see on the four-hour chart, the gold price has recaptured the 21-Simple Moving Average (SMA) at $2,342. Thus, it is on track to push the record high of $2,365. Meanwhile, the Relative Strength Index (RSI) is above the midline, pointing north around 59.00. Therefore, this suggests that there is room for further upside. The immediate resistance lies at the psychological $2,350 level, on the way to new all-time highs. Further above, a fresh rally towards the $2,400 level cannot be ruled out.
If the correction in gold prices accelerates again, the static support at $2,330 is important for buyers. If they fail to defend this, sellers will push towards the April 4 high at $2,305. Moreover, there is a test of the April 5 low at $2,268 below this.
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