March 01, 2023
Spot gold third straight day uptrend as the dollar pulled back, although fears of more US interest rate hikes on the back of stubbornly high inflation kept a pause in rally. Moving away from the weakest level in two months at $1,805 recovery mode may continue towards $1848.
Gold price extends the previous day’s rebound from the 200-day Exponential Moving Average (EMA) to defy the three-week-old bearish channel. Adding strength to the recovery moves is the looming bull cross on the MACD and the RSI (14) rebound from the oversold territory.
The yellow metal marked its worst month since June 2021 in February after a string of US data pointed to a resilient economy and a tight labour market, stoking fears that the US feferal reserve would deliver more interest rate hikes to curb inflation.
Next of relevance remains the United States official and ISM Manufacturing PMI data, which will shed more light on the strength of the US economy, impacting the Fed rate hike expectations.
High interest rates dampen gold's appeal as an inflation hedge while raising the opportunity cost of holding the non-yeilding asset.
Money markets expect the US central bank's target rate to peak at 5.5% in September, from a current range of 4.50% to 4.75%. Chances of rate cuts this year have been largely priced out.
