Gold extends the recovery from the $5,000 area early Wednesday on falling Oil prices.
The US Dollar turns south again as risk sentiment remains in a sweeter spot, with focus on US CPI data.
Technically, Gold closed Tuesday above 61.8% Fibo level at $5,141; is more upside on the cards?
Gold is extending the recovery above the $5,200 barrier in Asian trades on Wednesday, as buyers appear hopeful heading into the US CPI data release for further upside traction.
Despite the escalating Middle East war, Gold has struggled to shine as a traditional store of value, as well as an inflation hedge.
However, the renewed selling in Oil prices, following a Reuters report that “the IEA has proposed the largest release of oil reserves in its history to bring down crude prices, lifts risk sentiment and reduces the haven appeal of the US Dollar. This, in turn, supports the extended rebound in Gold from near the $5,000 neighbourhood.
Markets are eagerly awaiting the US CPI inflation data for February to determine whether Fed interest rate cuts remain on the table later this year. The inflation report could be the critical catalyst that gold buyers are yearning for to re-establish the uptrend.
The US core CPI is seen holding steady at 2.5% on an annual basis in February. The monthly core CPI is expected to rise by 0.2% in February after a 0.3% growth in January. Meanwhile, the headline annual CPI inflation is likely to remain at 2.4% in the same period.
The reaction to the US inflation data could be temporary and short-lived in the face of Middle East war updates and the volatility in Oil prices, which could overshadow investors’ sentiments.
Daily technical analysis
The latest RSI reading near 57 stays comfortably above the 50 midline, indicating positive but not stretched momentum after the recent pullback from the late-May peak.
If the core annual and monthly CPI data surprise to the upside, it could price out potential Fed rate cuts for this year, reviving the US Dollar uptrend. In this case, Gold could fall back toward the $5,000 support area before unleashing additional downside toward the 50-day SMA at $4,915.
Conversely, Gold could sustain the recovery momentum if inflation slows at a faster rate than expected. This scenario would push Gold further toward the 78.6% Fibonacci resistance at $5,342 if the $5,250 psychological barrier is taken out decisively.
Will US CPI inflation data propel GOLD buyers?
Gold is extending the recovery above the $5,200 barrier in Asian trades on Wednesday, as buyers appear hopeful heading into the US CPI data release for further upside traction.
Despite the escalating Middle East war, Gold has struggled to shine as a traditional store of value, as well as an inflation hedge.
However, the renewed selling in Oil prices, following a Reuters report that “the IEA has proposed the largest release of oil reserves in its history to bring down crude prices, lifts risk sentiment and reduces the haven appeal of the US Dollar. This, in turn, supports the extended rebound in Gold from near the $5,000 neighbourhood.
Markets are eagerly awaiting the US CPI inflation data for February to determine whether Fed interest rate cuts remain on the table later this year. The inflation report could be the critical catalyst that gold buyers are yearning for to re-establish the uptrend.
The US core CPI is seen holding steady at 2.5% on an annual basis in February. The monthly core CPI is expected to rise by 0.2% in February after a 0.3% growth in January. Meanwhile, the headline annual CPI inflation is likely to remain at 2.4% in the same period.
The reaction to the US inflation data could be temporary and short-lived in the face of Middle East war updates and the volatility in Oil prices, which could overshadow investors’ sentiments.
Daily technical analysis
The latest RSI reading near 57 stays comfortably above the 50 midline, indicating positive but not stretched momentum after the recent pullback from the late-May peak.
If the core annual and monthly CPI data surprise to the upside, it could price out potential Fed rate cuts for this year, reviving the US Dollar uptrend. In this case, Gold could fall back toward the $5,000 support area before unleashing additional downside toward the 50-day SMA at $4,915.
Conversely, Gold could sustain the recovery momentum if inflation slows at a faster rate than expected. This scenario would push Gold further toward the 78.6% Fibonacci resistance at $5,342 if the $5,250 psychological barrier is taken out decisively.
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