In the late European session on Tuesday, the price of gold (XAU/USD) surged close to fresh all-time highs, reaching approximately $2,266.86. This remarkable ascent occurred despite a significant jump in the value of the US Dollar, propelled by robust recovery in the United States Manufacturing PMI during March.
The impressive rally in gold can be attributed to an improved safe-haven bid, which has effectively counteracted the impact of the strengthened US Dollar. Market sentiment remains bullish for gold, fueled by expectations that February’s core Personal Consumption Expenditure Price Index (PCE) figure, hitting a two-year low, will prompt the Federal Reserve to implement interest rate cuts thrice this year.
However, maintaining these elevated levels may prove challenging for gold as US bond yields continue to climb. The 10-year US Treasury yields have surged to 4.34%, reflecting a market sentiment shift away from anticipating Federal Reserve rate cuts in June. The rise in yields elevates the opportunity cost of holding non-yielding assets like gold.
GOLD PRICE DROPS RS500 TO RS237,100 PER TOLA
Investor attention remains fixated on key economic indicators, particularly the US Nonfarm Payrolls (NFP) for March, slated for release on Friday. This labor market data is expected to provide insights into the potential timing of Federal Reserve interest rate adjustments. In the interim, Tuesday’s focus is on the US JOLTS Job Openings for February, anticipated to reveal a slight decline to approximately 8.74 million job openings compared to January’s 8.863 million.
TECHNICAL ANALYSIS
From a technical standpoint, gold continues to hover near its all-time highs around $2,260. The precious metal has displayed strength since breaching the previous lifetime high of $2,223 on March 21, signaling further potential upside. With short-to-long term Exponential Moving Averages (EMAs) all showing upward slopes, near-term demand remains robust.
The 14-period Relative Strength Index (RSI) currently sits near 78.00, indicative of strong upward momentum. However, caution is warranted as signs of divergence between prices and the RSI, coupled with overbought levels, could trigger a corrective move in the near future. Investors are advised to closely monitor market developments for potential shifts in sentiment and price dynamics.
