Gold rose on Wednesday in accordance with expectations. The main growth driver was the signs of slowing inflation in the U.S., which strengthened investors' hopes for a pause in the cycle of key rate increases. However, the U.S. economy awaits another rate hike next month.
It should be noted that the market's response to low inflation is quite passive. After the statistics were published, the growth of gold was instantly leveled. There is resistance at the current level for further growth of the metal. Investors want to see a rhetoric change about rates directly from central banks.
The U.S. consumer price index (CPI) rose by 0.1% in March after rising 0.4% in February. According to a Reuters survey, the forecasted increase was expected to be 0. 2%. In 12 months since March, the core consumer price index rose by 5.6% after increasing by 5.5% in February.
Meanwhile, regulators are not hurrying with the cycle of monetary policy easing in their publications.
There is not enough information in the minutes of the previous meeting of the Federal Reserve System on monetary policy to understand the further actions of the U.S. Central Bank regarding interest rates.
Representatives of the central bank see signs of a moderate recession and stable high inflation.
One comment in the minutes suggests that the Fed is nearing the end of the tightening monetary policy cycle.
According to the technical analysis, gold looks weak. The metal failed to renew its local highs on the positive inflation data, and the growth attempt was immediately stopped. Now the sideways movement of the price becomes relevant. At the moment the quotes are close to the upper boundary of the forming rectangle. It is possible to try short positions, expecting a corrective movement of the metal.
The level of 2003 dollars will be the downside target. It can act as a barrier to further decrease. This price coincides with the previous highs for gold. The $2,000 round level may be inviolable. Stop-loss can be set at an update of the local highs near $2035. In case this level is overcome, the test of the historical maximums of the price should be expected.
Decrease in the price of gold:
Take profit – 2001
Stop-loss – 2035