Gold price made rather subtle movements for the second session in a row on Tuesday ahead of the CB consumer confidence numbers. Signs that confidence improved in February will likely aid the bulls to defend the crucial support zone of $1,800 per ounce. Even so, concerns over a hawkish Fed remain at the back of investors’ minds.
Financial markets remain choppy amid uncertainties over the extent of the Fed’s hawkish tilt. Investors now await for some cues from the CB consumer confidence data set for release later on Tuesday.
Analysts expect the confidence level in financial markets to have improved in February from 107.1 to 108.5. A rise in the figure will likely improve the risk sentiment; giving the bulls the steadiness needed to defend the crucial support level of $1,800 per ounce.
Even so, the rallying of Treasury yields and the US dollar by extension continue to weigh on gold price. As at the time of writing, the benchmark 10-year Treasury yields were up by 0.84% at 3.94%. Concerns over a hawkish Fed and probable recession have been boosting US bond yields in recent weeks. Granted, signals of an economic slowdown may support precious metals due to their position as safe havens.
Gold price prediction
At the beginning of February, gold price rallied to a level last seen in mid April 2022. At that point, it had risen by about 7% since the beginning of the year. It has since erased those gains; declining to a two-month low of 1,805.32 earlier on Tuesday. As at the time of writing, the precious metal was down by 0.28% at 1,811.72.
Even with the steady decline observed in February, the bulls are still in control. In early January, the formation of a golden cross rubber-stamped the bullish trend. The pattern forms when the medium-term 50-day EMA crosses the long-term 200-day EMA to the upside. Granted, gold price is trading below the 50-day EMA despite the long-term 200-day EMA offering steady support.
At the short term, I expect the precious metal to continue finding support along the 200-day EMA around 1,800 ahead of the consumer confidence data. If the data comes in lower-than-expected, the bears may have an opportunity to retest December 2022 low of 1,783.33.
On the upside, a rebound past the current resistance zone of 1,820.62 is probable. Even so, gold price will likely continue to trade below 1,850 for a while longer.