Fundamental analysis Gold for 15.03.2024

Gold price (XAU/USD) attracts some dip-buying on Friday and reverses a major part of the previous day's slide back closer to the weekly low.The move came despite the release of a hotter-than-anticipated US Producer Price Index (PPI), which typically suggests a likelihood of the Federal Reserve (Fed) maintaining or increasing interest rates. However, market sentiment leans towards a higher chance of rate cuts by the Fed in June, supported by a decline in US Treasury bond yields and a lack of substantial USD buyers. Additionally, a subdued tone in equity markets has bolstered demand for the safe-haven appeal of gold.

Data released on Thursday showed that the US producer prices increased more than expected in February, which might force the Federal Reserve to keep interest rates elevated and prompt some selling around the Gold price.

The US Bureau of Labor Statistics reported that the Producer Price Index for final demand rose by a 1.6% YoY rate in February as compared to the previous month's upwardly revised print of 1% and the 1.1% market estimates.

Separately, the US Department of Labor (DOL) published the usual Initial Jobless Claims data, which showed that the number of individuals filing for unemployment insurance for the first time unexpectedly fell to 209K last week.Despite this, the probability of a June rate cut by the Fed remains around 60%, aiding in limiting losses for gold.

Despite the rebound, gold remains within a familiar range, with traders awaiting further clarity on the Fed's monetary policy stance. Overbought conditions on the daily chart and anticipation of the upcoming FOMC meeting add caution for bullish traders. Economic releases on Friday, including the Empire State Manufacturing Index, Industrial Production figures, and the Preliminary Michigan Consumer Sentiment Index, may offer some directional cues.

Technical analysis and scenarios:

The Alligator indicator indicates that the market is in a consolidation phase, as indicated by intertwined moving averages. This means that there is currently no clear trend direction. Awesome Oscillator (AO) and Accelerator Oscillator (AC) are in the gray zone, indicating neutrality with a hint of divergence. This divergence indicates a potential change in direction, but is not a reliable single signal for entering positions. Given these indicators, the main scenario involves continued sideways movement within certain support and resistance levels, awaiting a clearer signal from the market or economic indicators that could determine the next trend.

Main scenario (BUY)

Recommended entry level: 2175.00.

Take profit: 2195.00.

Stop loss: 2155.00.

Alternative scenario (SELL)

Recommended entry level: 2155.00.

Take profit: 2130.00.

Stop loss: 2175.00.