Gold prices continued to rise for the fourth consecutive day in the mid-North American trading session. Traders in the United States returned to work after the Presidents’ Day holiday and reacted positively to economic news. The decision by China to lower interest rates, combined with a decrease in US Treasury bond yields, supported the upward movement of gold prices.
Last week, economic data from the US, particularly the Consumer Price Index (CPI) and the Producer Price Index (PPI), surpassed expectations, indicating that inflation remains higher than anticipated. This news heightened concerns among investors, contributing to the increase in gold prices. Currently, the price of gold against the US dollar (XAU/USD) is at $2,028.44, up by 0.52%.
Despite investors’ cautious stance on the US Federal Reserve (Fed), US Treasury bond yields edged lower, with the 10-year note yield dropping by four basis points to 4.256%. The Chicago Board of Trade (CBOT) data suggested that the Fed might lower rates by 102 basis points in 2024, which is less than the previous estimate of 180 bps in mid-January.
In the absence of significant economic data from the US, the US dollar (USD) remained relatively stable. Traders are eagerly awaiting the release of the latest Federal Open Market Committee (FOMC) Meeting Minutes for further insights into the Fed’s monetary policy.
Market analysis indicates that despite expectations of rate cuts by the Fed in June 2024, gold prices continued to rise. The US Dollar Index, which measures the USD against other major currencies, is trading around 104.20, showing little movement.
Recent inflation reports from the US have prompted a change in tone from Fed officials, who are now adopting a more cautious approach. Atlanta Fed President Raphael Bostic emphasized that the Fed is not in a hurry to ease policy, while San Francisco Fed President Mary Daly highlighted the need for patience and agility in responding to economic changes.
Looking ahead, investors will closely monitor the release of the FOMC Meeting Minutes and speeches from Fed officials this week. Additionally, key economic indicators such as S&P Global PMIs, Initial Jobless Claims data, and the Chicago Fed National Activity Index will provide further insights into the state of the US economy.
In terms of technical analysis, gold prices remain above key moving averages but face resistance near the 50-day SMA. A breach of this level could lead to further gains, while a drop below $2,000 may signal a downward trend with potential support levels at the 100-day SMA and December 13 low.
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