Gold prices broke a new record on Friday, approaching $2,100. Now the market is gearing up for a big week filled with significant macroeconomic risks.
Gold notches its best weekly gain since November
cryptokoin.comAs you follow from , gold jumped out of the area where it was stuck on Friday. Gold contracts for April delivery closed at $2,095.70 on Friday, setting a record for the precious metal. Thus, it increased by more than 2% compared to last week. The rally began Thursday when prices broke above initial resistance above $2,050 after the Federal Reserve’s preferred inflation gauge showed a moderate increase in consumer prices. Alex Kuptsikevich, senior market analyst at FxPro, makes the following assessment:
Thursday and Friday’s gains reaffirm gold’s ability to break above its 50-day moving average, which it failed to do a month ago.
If this scenario occurs, it is possible for gold to advance another $225.
Alex Kuptsikevich states that gold managed to rise above the $ 2,050 resistance. In this regard, he adds that the next major resistance level to watch is $2,088. At the same time, the market could move significantly higher if the momentum continues. The analyst says the following on this subject:
There is an even longer-term scenario. The pullback from the beginning of the year to mid-February is a classic Fibonacci retracement of 61.8% of the initial growth impulse from the October lows. The realization of this scenario would be an advance to $225.
Gold’s movement is a result of its months-long consolidation!
However, not all analysts are convinced that gold will rise even if it finishes the week with significant momentum. Gold’s outward move could be a result of its months-long consolidation, Nicky Shiels, head of metals strategy at MKS PAMP, wrote in a note on Thursday. Shiels says momentum could push gold prices higher, but the fundamental picture remains the same for now. He explains his views on this subject as follows:
Positions in gold and silver being neutral and short respectively, technically compressed price action, and general sentiment in precious metals depleted were truly a recipe for unexplained outsize moves. Was PCE a game changer? No, and there isn’t enough data to declare that disinflation is about to end, and the Fed may never cut back. Can technical rallies extend? Certainly. But this is not a catalyst to attract new investor interest and is not chasing physical alone, so it will depend on paper shorts and cues provided by macro. Overall, gold continues to rise.
Gold may have difficulty maintaining its gains!
Market analysts at CPM Group are also not optimistic that the gold market will maintain Friday’s gains. For this reason, analysts underline the following points:
Gold prices sold off each time they tested resistance levels, and as prices tested strong support levels, investors returned to the market and opened new long positions once again. This kept gold prices in a wide range, mostly above $2,000. Gold prices are now testing $2,100 after climbing solidly above $2,050 yesterday. The market appears to be looking for reasons to long gold and taking profits as technical resistance levels are tested. It is unclear whether prices will continue to climb in the near term. However, they have already made strong gains, indicating the potential for a short-term pullback due to profit-taking. A decline in prices could push gold towards $2,075. This could potentially present a buying opportunity if the upward momentum continues.
Markets will follow this data
Some analysts state that gold will face a significant test next week with the release of the February non-farm payrolls report. Meanwhile, Fed Chairman Jerome Powell will testify before Congress for two days. At the same time, markets will be eagerly waiting for what Powell will say.
Adam Button, chief currency strategist at Forexlive.com, says he will likely pay more attention to labor market data next week as it could have more impact on the US dollar. He notes that weak labor market data will impact the US dollar more than Powell’s comments.
- Tuesday: ISM services PMI.
- Wednesday: ADP employment data. Bank of Canada monetary policy decision. Powell’s testimony before the House Financial Services Committee. JOLTS job postings.
- Thursday: European Central Bank monetary policy meeting. Weekly unemployment claims. Powell’s testimony before the Senate Banking Committee.
- Friday: Non-farm employment report.
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