Follow Up for1st March Gold post & Extended Gold Analysis
Afternoon Session: Gold rose on weaker dollar and reached our anticipated target 2060$..what next?
Click here for the Gold analysis posted on 1st March 2024
Highlights:
- Gold surges past $2,080 on weakened dollar and dismal US economic data.
- New York Fed President anticipates interest rate drop later this year.
- Caution advised as profit booking looms; support at $2065, resistance at $2098 for Gold.
Overview:
In the dynamic world of financial markets, gold has taken center stage with a surge that has surpassed the $2,080 mark. The precious metal's remarkable ascent can be attributed to a combination of factors, including a weakened dollar and lower Treasury yields, all against the backdrop of discouraging US economic statistics. Let's delve into the key factors influencing this surge and analyze the support and resistance levels for both Gold and Gold MCX prices.
Weakened Dollar and Lower Treasury Yields:
Gold's impressive climb is closely linked to the weakening of the US dollar and the decline in Treasury yields, driven by disappointing economic figures. The data for February indicates a continued downturn in US manufacturing, coupled with a concerning deterioration in the University of Michigan's consumer surveys. Furthermore, the annual growth rate in US inflation in January hit its slowest pace in nearly three years, adding to the uncertainties in the market.
New York Fed President's Outlook:
New York Fed President John Williams has recently provided insights into the future trajectory of interest rates. Williams anticipates a drop in interest rates later this year, citing concerns over reducing inflation and a seemingly strong economy. However, he emphasized that the current economic conditions do not justify a rate hike at this time.
Technical Analysis and Support/Resistance Levels:
Gold Prices: Support at $2065, Resistance at $2098
Gold MCX Prices: Support at 63180, Resistance at 63820
Market Action and Recommendations:
Despite Friday's sharp rally, caution is advised as profit booking seems imminent. A hold below $2078 will confirm support levels till $2056. Investors and traders should closely monitor these levels and consider adjusting their positions accordingly.
Upcoming Economic Data:
The week ahead holds significant economic data releases, including the Spanish Unemployment Change and Sentix Investor Confidence from the Euro Zone. These indicators could further influence gold prices, adding another layer of complexity to the current market dynamics.
Conclusion:
In conclusion, the surge in gold prices is a result of a confluence of factors, including a weakened dollar, lower Treasury yields, and concerning US economic data. As the market remains in a state of flux, investors must exercise caution, keeping a watchful eye on support and resistance levels, and be prepared for potential profit booking after the recent rally. The upcoming economic data releases will undoubtedly play a role in shaping the trajectory of gold prices in the coming days.
Support and Resistance Levels:
