Gold prices hovered near a two-month high on Monday, spurred by weaker US economic data last week. The figures raised hopes for a June interest rate cut by the Federal Reserve.
The increase was driven by the release of February's ISM Manufacturing PMI in the US, which came in below expectations. Construction spending showed a decline in January, resulting in US two-year Treasury note yields falling sharply, dragging on the US dollar. Both moves reflect that markets now see a greater risk of the Federal delivering four rate cuts this year rather than three as seen earlier in the week.
Data released on Thursday showed the smallest increase in US inflation for January in almost three years. Market participants currently believe that price pressures will remain higher for longer than previously anticipated. This has increased interest in gold as a safe-haven asset.
Investors' attention is also focused on the upcoming US employment report for February, due on Friday. The statistics could play a key role in further economic outlook.
Despite the recent volatility, the bulls are in no hurry to open new long positions on gold, preferring to wait for new signals regarding the Fed’s rate cuts.
Gold prices are forming an uptrend on the H4 timeframe. The price encountered resistance at the level of 2085.00. The Stochastic Oscillator curve (standard values) is in the overbought zone. The metal price, having pulled back from the resistance, could start correcting within the rising trend.
Signal:
The short-term outlook for GOLD is to sell.
The target is at the level of 2050.00.
Part of the profit could be fixed near the level of 2065.00.
A Stop-loss could be placed near the level of 2105.00.
The bearish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.
This content is for informational purposes only and is not intended to be investing advice.
