Contents
Gold price (XAU/USD) begins the new week on a positive note, extending the recovery from previous lows. The surge in Gold price is attributed to a weakening US Dollar and a decrease in US Treasury bond yields, bolstered by a mixed market sentiment.
Extended Recovery Gains
As Chinese traders return from the Lunar New Year holiday with optimism, the broader Asian equity markets exhibit cautious trading. Investors are reevaluating expectations of a Federal Reserve interest rate cut following higher-than-anticipated US Consumer Price Index (CPI) and Producer Price Index (PPI) data. Despite the delay in expectations for a rate cut, Gold price remains resilient, benefiting from US Dollar weakness.
US Dollar Weakness and Market Sentiment
The US Dollar continues to face downward pressure at the start of the week, with traders adjusting positions ahead of the release of the February Fed meeting minutes. Furthermore, the US market observes a holiday on Monday, leaving the Dollar vulnerable to shifts in risk sentiment.
Factors Supporting Gold Price
Gold price also benefits from subdued performance in US Treasury bond yields and geopolitical tensions in the Middle East. Recent events, including attacks on ships in the Red Sea, contribute to the safe-haven appeal of Gold. Additionally, concerns about global economic growth act as a tailwind for Gold, following reports of recessions in the UK and Japan.
Anticipated Price Movements
Gold price is expected to maintain its upward trajectory from recent lows, with the possibility of exaggerated movements amid thin trading volumes due to holidays. Investors are keenly awaiting Wednesday’s Fed Minutes and US S&P Global business PMI data on Thursday for further market direction.
Read more: Week Ahead: What to Watch in Markets
Gold Price: Technical Analysis
On the daily chart, Gold price aims to surpass the 21-day Simple Moving Average (SMA) at $2,025 to sustain the recovery. The 14-day Relative Strength Index (RSI) indicates a positive trend, potentially favoring Gold buyers if it surpasses the midline. Upside resistance levels include the 50-day SMA at $2,032 and the psychological barrier of $2,050. Conversely, failure to breach the 21-day SMA could invite selling pressure, with support levels at $2,011 and $2,000.
Source: Tradingcompass.io
Conclusion
Gold price continues its recovery from recent lows, driven by a combination of factors including Dollar weakness, geopolitical tensions, and concerns about global economic growth. While technical indicators suggest bullish momentum, market participants remain cautious ahead of key economic data releases later in the week.
