Gold Price in Limbo: Can Bulls Reclaim the Throne?

The gold price is stuck in neutral on Thursday, April 25th, 2024, hovering just above the $2,300 mark for the second consecutive day. This indecisiveness stems from conflicting forces: reduced expectations of Federal Reserve interest rate cuts and a generally positive risk appetite in the market, which are both limiting the upside potential for gold.

Investors await key US data (GDP today, PCE inflation tomorrow) to gauge the Fed’s policy direction. This data will impact the US dollar and likely influence the near-term gold price.

Hawkish Fed Rhetoric Dampens Rate Cut Bets, Weighing on Gold

Recent hawkish remarks from several Fed officials have doused investor enthusiasm for potential rate cuts. This shift in sentiment comes after stronger-than-expected US consumer inflation figures, prompting investors to revise their expectations for the timing of the first rate cut to September 2024, with a lower number of cuts anticipated throughout the year. This has kept US Treasury bond yields elevated, putting downward pressure on the non-interest-bearing gold price as reported by FXStreet.

Easing Geopolitical Tensions Further Suppress Gold’s Safe-Haven Appeal

Adding to the gold price’s woes is the subsiding concern about a major escalation in the Middle East. Geopolitical tensions often act as a catalyst for gold purchases, as investors seek the safe-haven qualities of the precious metal. However, with tensions appearing to cool, this traditional driver of gold demand is currently absent.

Technical Analysis: Key Levels to Watch for Gold Price Direction

From a technical standpoint, gold appears to have settled below the 23.6% Fibonacci retracement level of the February-April rally. However, it has shown some resilience above the crucial $2,300 support level breached earlier this week. Daily chart oscillators, although losing momentum, remain in positive territory. Analysts recommend waiting for a confirmed breakdown below the $2,300-2,290 zone, or a revisit of the two-week low touched on Tuesday, before positioning for a further decline as suggested by FXStreet.

A confirmed break below $2,300 could send gold down to the $2,260-2,200 zone, with potential support at $2,225 and the 50% Fibonacci level around $2,200.

Conversely, a breakout above $2,325 could propel gold towards $2,350, with resistance at the overnight high and the $2,380 zone. A break above $2,400 could even lead to a retest of the all-time high near $2,430.

Looking Ahead: US Data in Focus for Gold Price Direction

The near-term trajectory of the gold price hinges heavily on the upcoming US economic data releases. A stronger-than-expected GDP report or a hotter-than-anticipated PCE inflation reading could reignite hawkish Fed expectations, leading to a stronger US dollar and putting downward pressure on gold. Conversely, weaker-than-expected data could trigger a reassessment of the Fed’s monetary policy stance, potentially.