As the Gold price turns positive above the $2,500 mark, investors are keeping a close eye on the upcoming US Producers Price Index (PPI) and Jobless Claims data for further market direction.
The recent US Consumer Price Index (CPI) data release had a significant impact on market sentiment, leading to a rebound in the US Dollar and Treasury bond yields. Despite this, Gold buyers remain optimistic, with the Relative Strength Index (RSI) signaling a potential breakout in the near future.
US CPI Data and Market Reaction
Following the release of the US CPI data, which showed a slight increase in inflation, market expectations for an aggressive Fed rate cut have diminished. While the headline annual CPI figure eased slightly, core CPI numbers exceeded forecasts, leading to a shift in market sentiment.
Currently, markets are pricing in an 85% chance of a 25 basis points rate cut by the Fed, as opposed to 71% before the CPI data release. This change in expectations has influenced the recent movement in Gold prices.
Despite facing resistance near $2,530, Gold price has managed to hold above the $2,505 support level, indicating a consolidation phase. Traders are also monitoring other precious metals and industrial metals for potential support levels.
Technical Analysis and Outlook
From a technical perspective, Gold price continues to show resilience above the 21-day Simple Moving Average (SMA), with the RSI signaling bullish potential. A sustained breakthrough the $2,532 level could lead to further gains towards $2,550.
On the downside, a correction below $2,505 could negate the bullish outlook, with key support levels at $2,472 and $2,462 in focus.
Analysis and Conclusion
Gold price has experienced a rebound above $2,500, driven by market reactions to US CPI data and expectations for the upcoming Fed rate decision. While the recent inflation numbers have tempered hopes for a significant rate cut, Gold buyers remain cautious amid Dollar strength and market sentiment.
Traders are advised to monitor key support and resistance levels, as well as external factors such as geopolitical events and US economic data releases, to gauge the future direction of Gold prices.