Gold prices fell throughout the Asian trading session, reaching a low of approximately $1806.50 before the start of the European Open. Since then, there has been a negligible increase of approximately $6, and the current price of gold is 1812.
Gold is still in an extremely vulnerable position, with the fundamentals pointing to further losses and the technical pointing to the possibility of a short-term correction.
Gold bulls have had a difficult time as of late because the Fed Funds peak rate has been steadily increasing (it is now 5.4%, up from 4.8% at the beginning of February). Along with that bond yields are increasing, which causes prices to decrease.
The most recent significant data on the United States was made public on Friday. It was the PCE report that kept the currency strong and made people worried that inflation would be a bigger threat than they had previously anticipated it might be.
Market participants are taking the Fed hawks seriously due to the 25 basis point hikes priced in for the March, May, and June FOMC meetings.
The ongoing geopolitical concerns keep market investors flocking to the greenback as a haven play. This has also benefited the dollar and contributed to its rise.
Before later today’s scheduled speech by a Fed policymaker named Phillip Jefferson, the United States will publish data on durable goods, potentially raising volatility and giving the dollar additional momentum. Recent changes, especially in the US dollar, have been driven by data, which I anticipate will continue.
Technical outlook
Gold reached a new yearly low overnight and is currently on course to lose money for the fifth day in a row, according to the technical analysis of the market.
Bears had had a solid grip on the market since February 2, when the yearly high of $1960 was set. And they continue to do so today; what a change can occur in just three weeks!
At the time, the next destination for the precious metal was the $2000 handle.
There is a lot of pressure on gold prices to go down. Several technical indications point to the possibility of a recovery from current prices or slightly lower prices.
The psychological level of $1800 may provide some relief. And the range of $1796–1794, just below that, has a lot of important points. This includes the fib retracement, the swing low of December 28, 2022, and the 100-day moving average.
Additionally, the psychological level of $1800 may provide some relief. When you consider this in conjunction with the fact that the RSI has entered the “oversold” area on the daily time frame.
I believe the price of gold may see a short-term rebound. The $1820 is the first place where there is a significant amount of resistance.
If the price falls below the support levels at $1800 and $1796, we may see a test of the 200-day moving average near the $1775 handle. This scenario is possible if the price breaks below those support levels.
