Fundamental outlook for gold: The key remains in US economic data, focus on next week's CPI report.
Although February's non-farm payroll employment numbers were far higher than expected, rising unemployment rates and slowing wage growth have led to a reduction in the market's expectation for a 50 basis point interest rate hike at the March Fed meeting. Meanwhile, the market's pricing of the terminal rate of the Fed has dropped significantly, and expectations of an interest rate cut before the end of the year have rekindled.
According to the CME FedWatch tool, the probability of a 50 basis point rate hike by the Fed in March has fallen to 39.5%, with a 60.5% probability of a 25 basis point hike. The previous day's probabilities were 68.3% and 31.7%, respectively.
Overall, the February non-farm payroll report still shows that the US labor market remains strong, but some data is beginning to show signs of cooling off. Against the backdrop of high interest rates in over 40 years, the market has responded very sensitively, rapidly weakening its expectations for the Fed's interest rate outlook, causing the US dollar and US bond yields to plummet and driving up the price of gold.
Finally, the short-term direction of the gold price still depends on the situation of US economic data. The US CPI report for February, which will be released on Tuesday, March 14, is particularly important. If core inflation or detailed data show signs of a decline in inflation, it may push the US dollar and US bond yields even lower, thereby boosting the price of gold. If the data continues to show inflation stickiness, the US dollar and US bond yields may not fall so quickly.
Technical outlook for gold: Expected to continue its upward trend
On the weekly chart, the gold price rebounded from a major support area, which is composed of the 100-week moving average and the high point of the week of August 8, 2022 (1,807). This week recorded a longer lower shadow, continuing the rebound trend from last week. From the trend pattern, the upward momentum of the gold price is relatively strong, and it is expected to continue its upward trend next week.
If the trend does rise, the immediate resistance area may be at the 61.8% Fibonacci retracement level (1,899), the low point of the week of January 16 (1,897), and the high point of the week of February 6 (1,888). On the other hand, if the trend falls back, the market may retest the above-mentioned major support area (1,804/1,810).
However, the specific direction choice may still depend on the situation of US CPI data. It is worth noting that if the data fails to significantly weigh down the gold price, this will help confirm the (1,804/1,810) as a temporary low point, thereby providing support and driving force for the gold price to rise.
GOLD
GOLD
XAUUSD
Although February's non-farm payroll employment numbers were far higher than expected, rising unemployment rates and slowing wage growth have led to a reduction in the market's expectation for a 50 basis point interest rate hike at the March Fed meeting. Meanwhile, the market's pricing of the terminal rate of the Fed has dropped significantly, and expectations of an interest rate cut before the end of the year have rekindled.
According to the CME FedWatch tool, the probability of a 50 basis point rate hike by the Fed in March has fallen to 39.5%, with a 60.5% probability of a 25 basis point hike. The previous day's probabilities were 68.3% and 31.7%, respectively.
Overall, the February non-farm payroll report still shows that the US labor market remains strong, but some data is beginning to show signs of cooling off. Against the backdrop of high interest rates in over 40 years, the market has responded very sensitively, rapidly weakening its expectations for the Fed's interest rate outlook, causing the US dollar and US bond yields to plummet and driving up the price of gold.
Finally, the short-term direction of the gold price still depends on the situation of US economic data. The US CPI report for February, which will be released on Tuesday, March 14, is particularly important. If core inflation or detailed data show signs of a decline in inflation, it may push the US dollar and US bond yields even lower, thereby boosting the price of gold. If the data continues to show inflation stickiness, the US dollar and US bond yields may not fall so quickly.
Technical outlook for gold: Expected to continue its upward trend
If the trend does rise, the immediate resistance area may be at the 61.8% Fibonacci retracement level (1,899), the low point of the week of January 16 (1,897), and the high point of the week of February 6 (1,888). On the other hand, if the trend falls back, the market may retest the above-mentioned major support area (1,804/1,810).
However, the specific direction choice may still depend on the situation of US CPI data. It is worth noting that if the data fails to significantly weigh down the gold price, this will help confirm the (1,804/1,810) as a temporary low point, thereby providing support and driving force for the gold price to rise.
GOLD
GOLD
XAUUSD
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