Gold consolidates before taking the next step

黄金 failed to reach it’s all–time highs last week, as market returns to normal 和 inflationary pressures appear to be easing, gold’s price has consolidated near the $2000 level, remaining within last week’s opening 和 closing range. Following, signs of easing inflation, gold’s ascent was put on hold last week and it now appears that the shiny metal is moving in a upwards motion as the markets await further information. In this report, we aim to shed light on the catalysts driving the precious metal’s price, assess its future outlook and conclude with a technical analysis.

Gold stays near the $2000 key psychological level

The mixed economic data stemming from the US has halted gold’s ascent at it’s current levels, with the precious, slightly losing momentum. Last Wednesday, the US CPI print for March ticked down to 5% for the first time since the 10    of June 2021. The lower than predicted drop highlighted that the Fed’s fight against inflation may be yielding results and as a result weakened the greenback. Since the latest CPI print broadcasted indications of lower inflation that may ease the pressure on the Fed to continue their aggressive rate hiking path in order to avoid a recession. Following the inflation report on Wednesday the market grappled with the latest Fed meeting minutes, that indicated that Fed members anticipate a mild recession in the US , which boosted inflows towards the precious. 黄金 is unanimously considered to be a universal hedge against times of economic downturn, due to its safe haven status. Furthermore, the Initial Jobless Claims figure released on Thursday, came in higher than predicted with the actual figure standing at 239k versus the predicted figure of 232k, supporting the view that the US employment market is losing steam. This facilitated gold, to further capitalize against a weaker greenback and allowed the metal’s price to move towards its all–time highs. On Friday however, the mixed narrative from the US Retail sales and the University of Michigan’s expectations capped the precious 金属 ascent at around $2045 level. Even though the retail sales figures for March came below estimates, indicating a reduction of consumer spending in the economy, hence the potential for a slowdown may have weakened the greenback. However, the big picture was that Industrial production for March increased, in addition to a greater than expected reading of the University of Michigan’s indicators, signaling confidence in the US economy as a whole and may have mitigated fears of a recession. More importantly, the greater than expected earnings reports from major banks such as JP Morgan, Wells Fargo 和 Citibank signaled that the banking crisis fears may have been eradicated, thus providing some form of stability in the markets going into this week’s banks earnings releases. As a result, despite the precious gaining support due to indications of lessening inflationary pressures in the economy, the contradictory data 和 earnings releases on Friday provided support for the greenback leading to outflows from the precious metal. Given the weakness from employment indicators, in addition to tightening consumer spending from the retail sales report, the Fed may have lost some leeway in the event that they decide to further hikes rates, in order to further reduce inflationary pressures. However, statements made by Fed officials indicate otherwise, such as Fed Governor Waller who stated during a speech on Friday, “This growth would mean that, so far, tighter monetary policy and credit conditions are not doing much to restrain aggregate demand”,implying that the Fed may need to raise interest rates further during their May meeting, thus translating into support for the greenback. Furthermore, according to Reuters, Minneapolis Fed President Kashkari stated last Wednesday that allowing inflation to stay would be even worse for the labour market. Hence the relatively hawkish comments, pushed traders to speculate that rate hikes are still on the Fed’s agenda, as FFF at the time of this report implied an 88% probability of the Fed increasing interest rates by 25 basis points in their May meeting. The hawkish comments did not result in major fluctuations in the price of gold, yet we note a slight decline in the price of the precious as the greenback strengthened. On a monetary note, traders may anticipate the remaining three speeches by FOMC members Bowman, Waller 和 Cook throughout the week, as they may provide further indication into the Fed’s decision in May before the FOMC blackout period beginning this Sunday.

技术分析

黄金/美元4小时走势图

• Support: 1985(S1), 1950 (S2), 1900 (S3)
• Resistance: 2015 (R1), 2045 (R2), 2075 (R3)

Gold’s price seems to be moving in an upwards fashion, validating the upwards trendline formed on the 15    of March. We tend to maintain a bullish outlook as long as the price action remains above the 1985 (S1) level with the RSI indicator moving towards 70. However, we highlight the fact that the RSI indicator is currently near the figure of 50, implying temporary indecisiveness in the market. For our bullish outlook, to continue we would require the price to make a clean break the above the 2015(R1) resistance level, breaking also the 2045 (R2) resistance barrier and aiming for gold’s all-time high at the 2075 (R3) resistance line . Should the bears take over, we would require a clear break below the support line of 1985 (S1) and a move towards support at the 1950 (S2) level potentially moving even lower. Should the precious fail to break above 2015 (R1) and break below 1985 (S1) and the RSI indicator remaining near 50, we may see gold move in a sideways motion between R1 and S1.

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