Gold price remained close to a one-month low on Monday as investors eye further cues from the US CPI numbers set for release on Tuesday. The data is expected to shed more light on where interest rate hikes by the Fed are headed. As at the time of writing, it was down by 0.46% at $1,856.60.
What to expect in the new week
In addition to being a hedge against inflation, the precious metal is also a conventional safe-haven in times of economic turmoil. On the one hand, signs that inflation has peaked yielded expectations of a dovish Fed. Indeed, this was largely behind the rallying observed in the initial weeks of 2023.
Nonetheless, the Fed hawkish stance in its February interest rate decision eased the rallying. Granted, recession concerns have continued to offer support to gold price. Last week, the inverted yield curve deepened the most since the 1980s.
While the rising short-term Treasury yields have exerted pressure on the metal, it may be benefit it later in the year as the Fed eases on its rate hikes. Amid this confusion, investors are seeking clarify from the US CPI data.
Gold price prediction
Gold price traded subtly in early Monday’s session as investors focus on the US CPI numbers. As has been the case since late last week, the precious metal has continued to find support along the crucial zone of 1,850.
As seen on its daily chart, it has been hovering between the 25 and 50-day EMAs for a week now. Besides, its RSI is on a rather neutral level at 43. Based on these technical indicators, coupled with the fundamentals, I expect gold price to remain range-bound ahead of Tuesday’s consumer prices data.
On a broader perspectives, the uncertainties in the financial markets will likely retain the precious metal between the crucial zones of 1,800 and 1,900. Indeed, for as long as it remains within this range, this cautiously bullish thesis will be valid.
In the short term, it may continue to trade between the support level of 1,850 and the resistance zone, which is along the 25-day EMA at 1,884. Lower-than-expected CPI figures may yield a rebound although the psychological zone of 1,900 may continue to offer steady resistance to the precious metal for a while longer. On the flip side, if the figures come in higher than expected, the bears may have an opportunity to 1,826.