2024-02-24 09:16:44
Gold forecast for next week: US PCE inflation data is coming!Gold prices are brewing for a bigger explosion
#gold technical analysis#24K99 News Spot gold prices rose by more than $20 this week and closed near the $2,035/ounce level. A weaker U.S. dollar gave gold prices a boost, as did safe-haven demand spurred by tensions in the Middle East. Next week, the gold market will usher in heavyweight data such as the U.S. PCE inflation indicator, which is expected to trigger new market trends.
Spot gold closed this week up $22.17, closing at $2,035.33 per ounce, an increase of 1.1%. Gold prices hit a maximum of $2,041.34 per ounce this week.
Eren Sengezer, an analyst at the well-known financial website FXStreet, wrote on Friday (February 23) that the price of gold needs to remain above US$2,030 per ounce to attract gold buyers.
The gold market remains constrained by weeks of tight range trading as resistance at $2,050 an ounce continues to hold.
Sengezer said next week’s U.S. PCE inflation data might help gold prices break out of recent trading ranges.
Bob Haberkorn, senior market strategist at RJO Futures, said: “The rise in gold prices is mainly due to the slight weakening of the U.S. dollar. The precious metals market is very subtle at the moment, but even though interest rates are so high, there is still a lot of safe-haven buying.”
IG market strategist Yeap Jun Rong said: “Gold is regaining some influence from safe-haven funding given recent geopolitical developments suggesting tensions will persist for longer.”
“The recent gains in gold prices have been driven primarily by a weakening U.S. dollar and rising tensions in the Middle East, particularly concerns over political stability and oil supply disruptions, which has reinforced gold’s role as a top choice,” FXempire.com market analyst James Hyerczyk said in a report. safe-haven status.”
Gold prices likely to react to next week’s U.S. PCE inflation data
FXStreet analyst Eren Sengezer takes stock of economic events that may have an impact on the U.S. dollar and gold next week. Sengezer believes that gold prices may react to US PCE inflation data.
U.S. durable goods orders data for January will be released next Tuesday. Durable goods orders are expected to fall 4.5% in January following being flat in December. While the data is unlikely to trigger a major market reaction, the positive surprise might support the dollar.
The U.S. Bureau of Economic Analysis (BEA) will release the revised gross domestic product (GDP) for the fourth quarter of 2023 next Wednesday. The market is not expecting a revision to the initially announced annualized growth rate of 3.3%.
The January personal consumption expenditures (PCE) price index, which will be released next Thursday, will be closely watched by market participants. The core PCE price index, the Fed’s preferred measure of inflation, is expected to rise 0.4% month-on-month in January following rising 0.2% in December.
The market is fairly certain that the Federal Reserve will keep its policy rate unchanged at the 5.25%-5.5% range at its March policy meeting. According to CME’s “Fed Watch Tool”, the probability of a rate cut in May is currently 20%.
Sengezer pointed out that market positioning suggests that even if PCE inflation data confirms that the Fed will not adjust policy before June, the dollar does not have much room to rise. On the other hand, weak core PCE inflation data (0.2% or lower) may revive expectations of a rate cut in May. In this scenario, U.S. Treasury yields might head lower, allowing gold to gain bullish momentum.
During next Friday’s Asian trading session, investors will pay close attention to the manufacturing PMI and non-manufacturing PMI data released by the National Bureau of Statistics of China. If both PMIs are in expansionary territory above 50, gold might benefit from optimism regarding an improving demand outlook.
Gold technical outlook for next week
On the upside, gold prices have broken through the short-term resistance level of the 50-day moving average of $2,030 per ounce.Sengezer said gold needs to stay above this level to attract buyers. In this case, gold prices may rise further towards $2,050/oz and $2,065/oz.
(Spot gold daily chart source: FXStreet)
However, the relative strength index (RSI) on the daily chart fell back to 50, reflecting the lack of bullish momentum. The 23.6% Fibonacci retracement level of the latest uptrend forms a pivot level at $2020/oz.
Sengezer pointed out that if gold prices fall below $2020/ounce and confirm that level as resistance, gold prices may encounter strong support at $2005/ounce-$2000/ounce (100-day simple moving average, psychological level). Once the above support is lost, gold prices may target $1,980 per ounce (38.2% Fibonacci retracement level).
Economies.com, a well-known financial website, wrote an article on Friday analyzing the technical prospects of gold prices. The article pointed out that gold prices showed a clear upward trend on Friday and stayed away from 2016.90 US dollars per ounce, thus strengthening the expectation that gold prices will continue their bullish trend in the next few trading days.The path for gold prices to rise towards the next target of $2,065.70 per ounce is open.
(Spot gold 4-hour chart source: Economies.com)
Economies.com added that it needs to be reminded that it is important for gold prices to remain above $2016.90 per ounce to reach the above target price.
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