Technical Analysis

GOLD Price Analysis – March 02, 2023

By LonghornFX Technical Analysis
Mar 2, 20233 min

Daily Price Outlook

The price of gold (XAU/USD) has fallen to $1,835.46 after a three-day recovery from a two-month low due to rising Treasury bond rates. As a result, traders of the precious metal struggled to find compelling reasons to support the recent uptick.

China's PMI Signals Economic Recovery, Gold Prices Respond

Recent PMI data shows that China's manufacturing sector expanded in February, with the National Bureau of Statistics reporting that the manufacturing PMI increased to 52.6, the highest figure since April 2012. This indicates a positive economic recovery in the leading industrial country and one of the main buyers of gold. The stronger-than-expected Chinese PMIs are supporting a risk-on sentiment.

In addition, the US dollar weakened due to stronger commodity currencies, which were boosted by China's positive manufacturing activity data, giving gold buyers an advantage. However, there are concerns about the US Federal Reserve's hawkish stance and worries about further inflationary pressures that could limit the price of XAU/USD.

Fed Officials Signal Possible Interest Rate Hikes in Response to Inflationary Pressures

Federal Reserve (Fed) officials have recently stated that the current monetary policy may not be enough to control high inflation in the near future, and further rate hikes may be necessary to address the issue. In addition, the manufacturing PMI for February was released at 47.7%, slightly up by 0.3% from the January reading of 47.4%.

This marks the third consecutive month of decline for the US economy after 30 months of growth. The release resulted in a considerable sell-off of both risky and safe assets. However, the prices paid index increased by more than experts had anticipated.

The DXY is currently trading at 104.59, indicating a decline in investor risk appetite. Additionally, hawkish comments from Federal Reserve officials regarding potential rate hikes, coupled with signs of rising inflationary pressures, caused the 10-year Treasury yield to climb to 4% and the expected final rate of the Fed to increase to 5.50%.

The rise in US Treasury bond rates is a reflection of the market's worries about economic contraction and inflation. This development reinforces expectations of a US Dollar rebound and a drop in the XAU/USD price.

 Gold Price Chart - Source: Tradingview

Gold (XAU/USD) Intraday Technical Levels

Support      Resistance

1825            1846

1813            1856

1803            1868

Pivot Point: 1835

Gold (XAU/USD) – Technical Outlook

The price of gold closed yesterday with a definite positive trend, closing above $1828.70, which is considered a signal to begin an intraday bullish wave. However, we can see that the price started the day badly, placing pressure on the stated level, which now serves as a critical support line. The price is being influenced by stochastic negativity, which is now visible.

As a result, the price is caught between technical variables that make us prefer to stay away until we have a better indication of the next trend. Breaking $1828.70 will reignite the correcting bearish scenario, pushing the price towards $1788.20 as the next key objective. Consolidating above it and exceeding $1840.00, on the other hand, will lead to additional gains and a near-term visit to $1878.80.

Today's trading range will likely be between $1815.00 support and $1850.00 resistance.



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