GOLD Analysis
Afternoon: GOLD Stability Amid Anticipation of US PCE Inflation Report
Highlights:
- Gold steadied as investors await a key US PCE inflation report, with Fed's Kashkari suggesting a wait for significant inflation progress before rate cuts.
- Traders see a 64% chance of a rate drop by November, while China's gold imports via Hong Kong dropped 38% in April to 34.6 metric tonnes.
- Upcoming data includes German GfK Consumer Climate, Richmond Manufacturing Index, and a speech by FOMC Member Williams.
Introduction:
Gold prices have steadied as investors remain cautious ahead of a major US Personal Consumption Expenditures (PCE) inflation report, which is expected to provide new clues on the Federal Reserve's policy stance. This report is particularly significant as it could influence the direction of future interest rates.
Economic Indicators and Market Reactions
- Federal Reserve Commentary: Minneapolis Federal Reserve President Neel Kashkari emphasized that the Fed should wait for significant progress on inflation before considering interest rate decreases.
- Market Expectations: According to the CME FedWatch Tool, traders currently see a 64% chance of a rate drop by November.
- China Gold Imports: Gold imports to China through Hong Kong decreased by 38% in April compared to the previous month, totaling 34.6 metric tonnes, down from 55.8 tonnes in March. This decline was reported by the Hong Kong Census and Statistics Department.
Upcoming Economic Data Releases
Key economic data scheduled for release includes:
- German GfK Consumer Climate (Euro Zone)
- Richmond Manufacturing Index (US Zone)
- FOMC Member Williams Speaks (US Zone)
Technical Analysis: Support and Resistance Levels
Gold prices are expected to find support at $2335 and $2328, with resistance at $2385 and $2397. For Gold MCX, support is anticipated at 71600 and resistance at 72650.
Trading Strategy
Given the current market conditions, the recommended trading action is to:
Buy on a drop around $2328, Target a price of $2355, Implement a stop loss below $2305
This strategy is based on the stabilization of gold prices and cautious investor sentiment ahead of key economic data releases.
Conclusion
The gold market remains steady as investors await the US PCE inflation report and other significant economic data. The Federal Reserve's cautious approach to interest rate changes, combined with declining gold imports to China, reflects a complex and evolving market landscape. Investors are advised to monitor upcoming economic releases and adjust their strategies accordingly.
Support and Resistance Levels:
