The gold price started the week higher and extended its rally after breaking above $2,000. The yellow metal managed to end its two-week streak, though it slumped from a one-year high of over $2,030 in the second half of the week. Thus, it made its first weekly close of over $2,000. March inflation data from the US and trade balance figures from China next week may affect the precious metal’s value.
Gold price may react with delay to US labor data!
cryptocoin.com As we have reported, many major global and equity markets will remain closed on Easter Monday and gold is likely to remain quiet at the start of the week. By late Monday or early Tuesday, there may be a delayed response to the US March jobs report and trading volumes may return to normal levels. Market analyst Eren Şengezer makes the following assessment:
Improvement in the Labor Force Participation Rate, which indicates softening labor market conditions, lower wage inflation and the deceleration in NFP growth could translate into lower US yields and allow gold to gain traction. However, it is useful to remember the rise in yields on Friday. Markets may still see this report as “good enough” for another Fed rate hike in May. In this case, a prolonged recovery in yields will limit the upward movement of gold.
This may enable gold to gain upward momentum.
The US BLS will release March Consumer Price Index (CPI) data on Wednesday. Core CPI, which excludes volatile energy and food prices, remained stable at 5.5% in February, up 0.5% month on month. In March, it is expected to increase by 5.6% and 0.4%, respectively. The analyst says that if the Monthly Core inflation data come in softer than expected, at 0.3% or less, markets may reconsider pricing as there will be no change in the Fed’s policy rate in May. Based on this, the analyst makes the following statement:
This, in turn, may put pressure on US bond yields and allow gold to gain upward momentum. On the other hand, a monthly core inflation of 0.7% or higher could cause investors to continue to bet on a 25bps increase and have an adverse effect on gold’s movement.
These data may put pressure on the gold price.
Trade Balance data from China during the Asian trading hours on Thursday will be watched closely by market participants. Markets forecast the trade surplus to shrink from $116.8 billion in February to $91.72 billion in March. Earlier this week, the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, said that they forecast the global economy to grow from 3.4% in 2022 to less than 3% in 2023. The analyst states that a disappointing trade report from China could rekindle concerns about the global economic slowdown and put pressure on the gold price.
These data could help gold finish the week on solid ground.
Finally, March Retail Sales and the University of Michigan’s April Consumer Sentiment Index will be on the US economic agenda on Friday. The analyst interprets the impact of these data as follows:
A sharp drop in Retail Sales could hurt the USD and help gold end the week on solid ground. However, it would be surprising if the data had a lasting impact on the USD’s valuation.
Gold price technical view
Market analyst Eren Şengezer analyzes the technical outlook of gold as follows. Gold’s Wednesday and Thursday pullback appears to be a technical correction after prices broke out of the ascending downward channel from November. The Relative Strength Index (RSI) indicator on the daily chart is hovering near 60, which indicates that the uptrend remains intact in the near term.
Should gold extend its correction, $2,000 (psychological level, static level) aligns as initial support. With a daily close below this level, additional losses could be seen towards $1,980 (20-day Simple Moving Average (SMA), midpoint of the ascending channel) and $1,960 (static level). If $2,000 holds steady, the gold price could remain in the consolidation phase before targeting $2,020 (static level) early next week, $2,032 (a one-year high set on April 5) and finally $2,050 (static level in March 2022).
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