Gold has been approaching the all-time high of $2431.45 per troy ounce as the U.S. Bureau of Labor Statistics reported a decrease in the Consumer Price Index (CPI) in April following three consecutive increases. Traders will be keeping a close eye on the market as significant economic data that can potentially affect the economy's health will be released next week.
Overview
Gold has been approaching the all-time high of $2431.45 per troy ounce as the U.S. Bureau of Labor Statistics reported a decrease in the Consumer Price Index (CPI) in April following three consecutive increases. Traders will be keeping a close eye on the market as significant economic data that can potentially affect the economy's health will be released next week.
High Impact Economic Events
Tuesday 12:30 pm (GMT+0): CPI m/m (CAD)
Tuesday 12:30 pm (GMT+0): Median CPI y/y(CAD)
Tuesday 12:30 pm (GMT+0): Trimmed CPI y/y (CAD)
Wednesday 02:00 am (GMT+0): Official Cash Rate (NZD)
Wednesday 02:00 am (GMT+0): RBNZ Monetary Policy Statement (NZD)
Wednesday 02:00 am (GMT+0): RBNZ Rate Statement (NZD)
Wednesday 06:00 pm (GMT+0): FOMC Meeting Minutes (USD)
Thursday 07:15 am (GMT+0): French Flash Manufacturing PMI (EUR)
Thursday 07:15 am (GMT+0): French Flash Services PMI (EUR)
Thursday 07:30 am (GMT+0): German Flash Manufacturing PMI (EUR)
Thursday 07:30 am (GMT+0): German Flash Services PMI (EUR)
Thursday 08:30 am (GMT+0): Flash Manufacturing PMI (GBP)
Thursday 08:30 am (GMT+0): Flash Services PMI (GBP)
Thursday 01:45 pm (GMT+0): Flash Manufacturing PMI (USD)
Thursday 01:45 pm (GMT+0): Flash Services PMI (USD)
Friday 06:00 am (GMT+0): Retail Sales m/m (GBP)
Friday 02:00 pm (GMT+0): Revised UoM Consumer Sentiment(USD)
Technical Analysis
Gold has been on an uptrend since February 14, when it reached the year's lowest price of 1984.16. Moreover, prices moved above the 50-period Exponential Moving Average, indicating a bullish outlook for gold. Moreover, there was a technical reversal to the upside, known as a failure swing in technical analysis, leading to a record all-time high of 2431.45 US Dollars per troy ounce. Specifically, the lowest point at 2146.09 did not fall below the previous low at 1984.46; instead, prices exceeded the peak of 2195.17. Subsequently, the bears pushed Gold prices lower, only to find support at the 50-period EMA and, combined with positive fundamentals, rebounded, aiming for the all-time high. Both the 50-period EMA and the Momentum oscillator support the bullish bias.
Potential Upside Targets
If the bulls manage to maintain control of the precious metal, traders may consider the following three potential upside targets:
2431.45: The initial price target stands at an all-time high of 2431.45, achieved on April 12.
2526.75: The second price objective is seen at 2526.75, corresponding to the 161.8 percent Fibonacci Extension drawn from the peak of 2431.45 down to the trough of 2277.24.
2680.96: An additional potential price objective could be identified at 2680.96, representing the 261.8 percent Fibonacci Extension drawn from the swing high at 2431.45 to the swing low at 2277.24.
Potential Downside Targets
Should the bears take control of the Gold market, traders may consider the following three potential downside targets:
2277.24: The initial target stands at 2277.24, aligning with the trough price marked on May 3.
2208.46: The second potential support is found at 2208.46, corresponding to the 50.00 percent Fibonacci Retracement drawn from the trough 1984.16 to the peak of 2431.45.
2155.97: An additional potential support could be identified at 2155.97, representing the 61.8 percent Fibonacci Retracement drawn from 2155.97 to 2431.45.
Fundamentals
According to the U.S. Bureau of Labor Statistics, the Consumer Price Index (CPI) has increased by 3.4% over the past 12 months, meeting expectations. When food and energy are excluded, the core inflation rate has seen a 0.3% monthly increase and a 3.6% annual increase, aligning with forecasts. The 12-month core inflation rate has been the lowest since April 2021, while the monthly increase has been the smallest since December. After the CPI data was released, the markets reacted positively, with futures linked to major stock indexes increasing and Treasury yields dropping. Futures traders have raised the implied probability of the Federal Reserve implementing interest rate cuts at the end of the year's third quarter.
Conclusion
Gold's value has been rising, approaching the record high of $2431.45 per troy ounce, propelled by technical and fundamental confluence. Prices found support at the 50-period Exponential Moving Average while the Consumer Price Index decreased for the first time this year. It is essential for traders to remain up-to-date on the latest geopolitical and economic developments, trade wisely, and closely monitor market trends to optimize investment returns and mitigate potential risks and losses.