On Tuesday, gold prices rose from a three-week low. The growth was caused by the weakening of the dollar after the publication of the official U.S. report on consumer inflation expectations. The data boosted hopes for interest rate cuts from the Federal Reserve.
A New York Fed report out on Monday said consumers expected lower inflation as well as weaker income and spending over the next several years.
According to Jun Rong, market analyst at IG, the survey has provided more room for Fed officials to consider earlier rate cuts in 2024. However, given the strong rebound in risk-on sentiment, potential safe-haven outflows could keep gold prices from rising, he added.
Stronger-than-expected jobs data, coupled with the latest Fed minutes had tempered sentiment for an early policy easing in the U.S.
According to the CME FedWatch tool, market participants are pricing in an about 62% chance of a rate cut by the U.S. central bank in March. This is significantly lower than a nearly 90% probability seen before the New Year.
Investors now await Thursday's U.S. consumer price inflation report for further clarity on the scale and depth of Fed's rate cuts.
As for the long-term outlook, according to Ole Hansen from Saxo Bank, three significant demand factors boosting gold this year: hedge funds, central banks, and ETF investors.
Central banks gobbled up gold last year. According to Hansen, there is no reason to think their appetite will decrease.
On the daily chart, the gold price is in an upward trend. It’s close to the support of the ascending channel.
A local downtrend is being formed on the H2 timeframe. Divergence of the Relative Strength Index (RSI) indicator (standard values) portends the price exit from the correction channel with a change in the direction of the price trend.
The short-term outlook for GOLD is to buy near the level of 1790.00.
The target is at the level of 2085.00.
Part of the profit should be fixed near the level of 2055.00.
A stop-loss should be placed near the level of 1995.00.
The bullish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.