The Gold spot price (XAUUSD) was invaded by bearish sentiment following Fed officials’ comments stating that progress in reducing inflation was lacklustre, with inflation well above its 2% target. Traders bet on an 89.4% chance of the Federal Reserve hiking rates in its May meeting, despite the U.S. economy showing signs of moderation which sent the greenback to its lowest in a year in the prior week.
The week ahead is jampacked with economic events, which Gold spot traders will be mindful of. The high-priority events include the U.S. Building Permits, Labour Market reports, Service and Manufacturing PMI, and Fed Official speeches will give traders an insight into the Federal Reserve’s mind.
Gold has benefitted from its safe-haven attribute and a weakening greenback, sending the spot price into an uptrend, up 10.73% from the year’s lows. The 100-day moving average is within a distance, while price action is trading diligently in an ascending channel pattern. Support and resistance were formed at the 1980.70 and 2048.72 levels, respectively.
Following a rejection of the ascending channel’s resistance, the price retraced with aggression towards the 100% Fibonacci Retracement level or support, where the prior upswing commenced. A rejection candle formed, suggesting that the market could be less inclined to lower the spot price.
If the rejection candle is a sign of bullish presence at support, price action could reverse and move higher, with bulls likely aiming for resistance at the 2048.72 level. Alternatively, a breakdown below support on high volumes could signal the intention of the market to extend a leg down, with the next probable level of interest at the 100-day moving average price.
Traders will likely proceed cautiously, given the week’s choppy lineup of economic data ahead. If the U.S. economy slows down, fears of a recession could prevail, leaving the Gold Spot Price with a prime opportunity to extend its gains. The 2048.72 level is likely if bullish traders commit to the upside.
Sources: Reuters, TradingView