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Gold price saw a consolidation phase early Monday following its record high of $2,195 reached on Friday. This consolidation comes amidst a temporary pause in the downward trend of the US Dollar and Treasury yields. All eyes are now on the upcoming US Consumer Price Index (CPI) data, which could provide the next directional impetus for gold prices.
US CPI Data: A Key Focus
The focus has shifted to the US CPI data after the release of the Nonfarm Payrolls report. The weakening US Dollar and Treasury bond yields were a result of a downward revision to the headline US NFP figure for January. The February NFP showed an increase of 275,000 jobs, surpassing market forecasts of 200,000. However, January figures were revised lower by 124,000 to 229,000. The report indicated a loosening labor market, reinforcing expectations for a potential US Federal Reserve interest rate cut in June.
Impact on Gold Price
Amidst expectations of a June Fed rate cut, gold prices surged, nearly touching the $2,200 mark. However, the metal is now experiencing a corrective phase, with traders cautiously monitoring inflationary pressures in China and awaiting the US CPI data release.
Technical Analysis: Daily Chart
The daily chart signals potential for a correction in gold prices due to extremely overbought conditions, particularly highlighted by the 14-day Relative Strength Index (RSI). If the correction gains momentum, initial support is expected around $2,154, followed by $2,146, where Thursday’s low and the 23.6% Fibonacci Retracement level coincide. Further downside could see gold prices testing the $2,115 level, representing the 38.2% Fibonacci Retracement.
Future Outlook for Gold Price
Gold buyers would need to push prices above the $2,200 threshold to continue the uptrend. A daily close above this level could open doors for further gains, with the next target being the psychological level of $2,250.
Conclusion
In conclusion, gold prices are currently consolidating after hitting record highs, with traders closely monitoring upcoming US CPI data. The technical outlook suggests a potential correction amid overbought conditions, with key support levels identified. However, a break above $2,200 could reignite bullish momentum in the gold market.
