Gold buy

Weak U.S. consumer data boosted a rise in gold prices

01 March 2023 156
Weak U.S. consumer data boosted a rise in gold prices

Today gold continues its rebound after reaching local lows during yesterday’s trading session. It was driven by Tuesday’s release of the U.S. business activity and consumer confidence data. They did not meet the expectations and showed that aggressive interest rate hikes have an impact on some economic processes. If negative statistics on the U.S. economy are persistent, it will be a bullish driver for gold. Central banks will be forced by a recession to lower rates faster in order to save the economy.

 

The trend of buying gold by central banks might continue for long, according to WGC forecasts.

 

In 2022 China produced about 10% of the global gold production. At the same time, the country imported around 37% of the precious metal last year. China’s gold reserves are estimated to be more than 2,000 tons. The largest importer takes the 5th place among the countries with the most gold reserves. State reserves are difficult to estimate, as the country publishes only customs data on gold imports but not changes in its reserves.

 

This year a rise in demand for the precious metal is expected in China because its economy has been increasing since the lifting of restrictive measures against COVID-19. A team of WGC analysts assumes that China is intended to boost its gold reserves to 5,000 tons by the end of 2025.

 

According to the technical analysis, the price of gold reversed the downtrend and broke through the Fibonacci level of 0.382 by the whole wave of rises. After breaking the downtrend, the rising momentum may continue. Technically, the growth target might be the 0.236 level, but there is a lack of fundamental drivers for this scenario, which might confirm the strength of the bullish momentum.

 

Thus, the growth target will be a resistance level near the price of $1,849. Gold consolidated around this level in mid-February. Stop-loss will be set at the opening level of yesterday's daily candlestick, which is equivalent to $1,818. Previously, this level supported gold prices.

 

The price of gold is likely to rise:

Take profit – 1,849

Stop-loss – 1,818

This content is for informational purposes only and is not intended to be investing advice.

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