Gold Gleams On Bitgenix: Will The Bullish Run Continue After Hitting A Two-Month High?

The gold market is witnessing a period of consolidation after a strong surge last week. On Monday, the price is hovering around $2085-$2087, making its highest level since December. This positive momentum is primarily driven by a weakening US Dollar, fueled by recent economic data hinting at a potential shift in the Federal Reserve’s monetary policy.

Technical Analysis

Looking at the technical side, gold experienced a significant price jump on Friday, confirming an upward breakout pattern. While the momentum has slightly eased, the indicators remain positive. The Relative Strength Index(RSI) sits comfortably below the “overbought” zone, suggesting room for further price increases.

Immediate resistance lies at the current highs near $2088-$2089. A successful breach of this level could propel the price towards the $2,100 mark, potentially even reaching the all-time high of $2144.

However, a minor pullback towards the $2,065 support level might occur if the bulls fail to conquer this crucial resistance. A sustained break below this point could expose the psychological level of $2050.

Fundamental Factors: Fed In Focus

The upcoming week will be pivotal for the gold market, with all eyes glued to Federal Reserve Chair Jerome Powell’s testimony before Congress. His insights on the Monetary Policy Report(MPR) are highly anticipated, as they could provide clues about the Fed’s future stance on interest rates.

Adding to the market’s anticipation is the release of the US labor market report. Recent data, including the PCE inflation gauge and the disappointing ISM Manufacturing PMI, has strengthened the Fed’s argument for a potential policy pivot.

Markets currently price in a 30% chance of a rate cut in May, increasing from 20% the previous week. This renewed dovish outlook has weakened the US Dollar and pushed down Treasury bond yields, further fueling the gold rally.

In the lead-up to these critical events, speeches from other Fed officials and the ISM Services PMI report will be closely monitored by gold traders. Additionally, China’s Caixin Services PMI will offer valuable insights into the health of the world’s leading gold consumer, potentially influencing market sentiment.

Conclusion

The gold market is currently enjoying a bullish run, supported by a weakening US Dollar and anticipation of a potential shift in the Fed’s monetary policy. While technical indicators suggest further upside potential, key economic data and Jerome Powell’s testimony will be crucial in shaping the gold price in the coming days.