Gold Price Eyes New Highs as US Dollar Wilts on Soft CPI. Will XAU/USD Rally?

The gold price fell just short of a 1-year peak overnight after the US Dollar weakened post US CPI data and the release of the Federal Open Market Committee (FOMC) meeting minutes.

To recap, US CPI was a touch below forecasts at 5.0% year-on-year to the end of March rather than the 5.1% anticipated and 6.0% previously.

Treasury yields eased across the curve as a result, with the 2-year bond slipping the most, finishing around 6 basis points lower, trading below 4.0%. It had traded above 5.0% in March.

Fed meeting minutes showed that the bank further retreated from the overtly hawkish stance that they have had until recently. While the tilt is for less aggressive tightening, it has mostly been perceived as still hawkish, just to a lesser degree. The banks’ internal researchers see a mild recession toward the end of 2023.

The minutes also revealed that the 25 bp hike at the March gathering was unanimous but that various board members had postulated both a pause and a 50 bp lift in the target rate. Interest rate markets are leaning toward a 25 bp rise at the next meeting in early May.

All of this served to undermine the US Dollar going into the New York close.

Overnight, San Francisco Federal Reserve Bank President Mary Daly and the Richmond branch President Thomas Barkin sang from the same song sheet. Both officials’ rhetoric leans toward monetary policy remaining tight for now.

The Aussie Dollar has been the big mover so far today after it was boosted following the unemployment rate there remaining near 50-year lows. It was 3.5% in March which was below estimates of 3.6% and 3.5% previously.

53.0k Australian jobs were added in the month, which was notably above the 20k anticipated and 64.6k previously.

Chinese trade data surprised to the upside with a surplus of USD 88.19 billion instead of the USD 40.00 billion anticipated.

Despite this, APAC equity indices are generally slightly softer after Wall Street chalked up small losses.

Silver made a fresh 12-month peak today at USD 25.66 a Troy ounce. Gold is also eyeing last week’s peak of USD 2,032 per ounce.

Crude oil made a 5-month high overnight and continues to trade near those levels. The WTI futures contract is near US$ 83 bbl while the Brent contract is a touch above US$ 87 bbl.

Looking ahead, the US will see job data and PPI numbers.

The full economic calendar can be viewed here.

GOLD TECHNICAL ANALYSIS

Gold traded at 2,028 overnight, just shy of the 12-month peak seen last week at 2,032 and these levels might offer resistance.

Since making a Triple Bottom between September and November last year, gold has had a stellar run to trade over 2,000 again.

A bullish triple moving average (TMA) formation requires the price to be above the short-term SMA, the latter to be above the medium-term SMA and the medium-term SMA to be above the long-term SMA. All SMAs also need to have a positive gradient.

After the recent price action, any combination of the 10-, 21-, 55-, 100- and 200-day Simple Moving Averages (SMA) meet the criteria for a bullish TMA.

On the downside, support may lie at the recent lows of 1,950, 1,935 and 1,885 as well as the breakpoint at 1,890.

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