Market Sentiment and Economic Indicators:
- Gold experienced a significant drop following the release of higher-than-expected inflation data, causing concerns about the Federal Reserve’s monetary policy.
- Despite the initial selloff, market sentiment seems to favor the idea that the Federal Reserve will continue with its planned rate cuts, as indicated during the December FOMC meeting.
- The CME’s FedWatch tool suggests a decreased probability of a rate cut in June, but market participants remain optimistic about rate cuts later in the year.
- Gold prices stabilized after the initial drop, supported by strong demand and potential for further ascent.
- The upcoming U.S. Consumer Price Index (CPI) report for February is anticipated to be a significant factor influencing gold prices, with expectations of a 0.4% monthly rise and an annual increase of 3.1%.
Technical Analysis and Price Levels:
- The main trend for gold remains up, but the market is showing signs of indecision and impending volatility, indicated by consecutive inside trading days.
- A trade above $2195.235 will signal a resumption of the uptrend, potentially triggering further upside momentum.
- Conversely, a trade below $2154.06 would indicate weakness and could lead to a minor top formation.
- A significant top would be confirmed by a closing price reversal top chart pattern, with potential downside targets at $2089.77 to $2064.87, followed by the 50-day moving average at $2047.17.
