Daily Price Outlook
Gold price exhibited a modest recovery and is trading at 1,983.13. The XAU/USD rose slightly on Monday after recent declines. However, the yellow metal remains under pressure as demand is lower due to concerns that the Federal Reserve may soon raise interest rates.
Navigating Global Economic Uncertainties
China, the world's largest gold consumer, revealed last week that its GDP grew at an annualized rate of 4.5% in the first quarter, significantly higher than the 2.9% growth seen in the last quarter of 2022. Additionally, Retail Sales rose by 10.6% annually, surpassing analysts' expectations of 7.4% growth. Consequently, XAU/USD regained its footing and increased, also benefiting from the uptick in risk sentiment.
However, stronger-than-expected UK CPI data reminded investors that major central banks might maintain stricter monetary policies than anticipated due to persistent global inflation. In response, global bond yields rose, causing the XAU/USD pair to experience significant downward pressure.
Speculation of Fed Rate Hike
The United States' preliminary PMI data from last week, released on Friday, provided a stronger argument for the Federal Reserve to increase interest rates again. Additionally, for the first time in the previous six months, the Manufacturing PMI rose above 50.0.
The encouraging numbers indicate that the US economy is rapidly improving, and labor demand may rise dramatically. As a result, the Fed needs to hike rates once more to maintain pressure on high inflation.
According to the CME FedWatch tool, markets are pricing in an 89% possibility of a 25 basis point Fed rate increase. However, despite hawkish Fed predictions, the USD Index remains muted, and DXY is now trading at 101.79.
Given the DXY's weak performance, the rates on US government bonds have also declined slightly. The yield on the US 10-year Treasury has decreased to around 3.56%.
As the USD Index becomes muted amid aggressive Fed predictions, XAU/USD holds above $1,980.00.
Looking ahead, this week, the Durable Goods Orders for March will provide support to the USD Index. Demand for durable goods is increasing, which suggests that household demand is improving and might lead to an increase in core inflation expectations. As a result, positive economic statistics would favor more Fed rate hikes.
Daily Technical Levels
Pivot Point: 1984
XAU/USD – Technical Outlook
Gold price succeeded in breaking the $1,992.20 level and concluded last week beneath it, reinforcing the ongoing correctional bearish trend's dominance on an intraday basis and paving the way towards $1,957.30 as the next primary target. Note that breaking this level will propel the price to visit the subsequent correctional level at $1,929.00.
As a result, we anticipate further declines in the upcoming sessions, bolstered by the negative pressure exerted by the EMA50. Keep in mind that breaching the $1,992.20 level, followed by the $1,997.75 level, will halt the negative scenario and prompt the price to attempt to reclaim the main bullish trend.
Today's expected trading range is between $1,960.00 support and $1,995.00 resistance.
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