Global Gold Analyticals February 18, 2024 – Analysis and Forecasts – February 18, 2024

Next week, all eyes are on the US February Purchasing Managers’ Index (PMI) report and the first official meeting of Federal Reserve Board (FRB) members in 2024.

Remember, whether the critical level of $2000 can remain a very important area will depend on gold’s reaction to important data and events in the coming week.

Events in the gold market last week:

The U.S. Bureau of Labor Statistics reported Tuesday that the consumer price index rose 3.1% in January. It is worth mentioning that the announced figure was much higher than market expectations, as the market was expecting 2.9%.

Core CPI, which also excludes food and energy items, rose 3.9%, consistent with December’s figures.

The yield on the 10-year U.S. Treasury note rose above 4.3% as the Federal Reserve is likely to keep interest rates on hold at its next two policy meetings after CPI data exceeded 60%, according to popular forecasting tool CME Group. , and gold falls below $2000 for the first time in 2024!

The U.S. dollar index also fell and closed in negative territory after rising 0.7% on Wednesday following the inflation news. Global gold ounces also fluctuated in a small range around $1990 on Tuesday before experiencing a sharp decline on the same day.

Then on Thursday, a day when markets were awaiting the U.S. retail sales report, U.S. data showed retail sales fell 0.8% in January to $700.3 billion. Additionally, used car sales decreased by 0.6% during the same period.

Yields on the 10-year U.S. Treasury note immediately fell to 4.2% after the disappointing data, which pushed global gold above $2,000 during the second half of Friday and the New York session.

Shortly after this report, Federal Reserve Vice Chairman for Supervision Michael Barr commented on the inflation-related data, saying central bank policymakers are confident inflation is on track to reach the 2% target. Barr also added that he and his colleagues need to see “more positive data” before starting the rate-cutting process.

The BLS reported that the Producer Price Index (PPI) for final demand increased 0.9% year over year in January.

The announced figure was lower than the previous 1%, but better than the market forecast of 0.6%.

The annual core PPI index also increased by 2% compared to a 1.8% increase in December.

The monthly net PPI index also increased by 0.5%, following a 0.1% decrease in the previous month.

Gold was unable to extend its gains on Thursday as the yield on the 10-year U.S. Treasury note recovered above 4.3% after the data was released.

Events in the forex and gold markets next week:

Next Monday, as the foreign exchange trading week begins, U.S. stock and bond markets will be closed for President’s Day.

On Wednesday, the Federal Reserve will announce its first meeting of 2024, to be held on January 30 and 31.

As you know, the Federal Reserve typically releases the minutes (which essentially describe what happened at that meeting) two weeks after the meeting.

Following the important NFP report released after the January Federal Reserve meeting, investors were disappointed not only by the delay in rate cuts through March, but also by the delay in rate cuts from May. This exact factor caused gold’s long-term upward trend to turn into a bearish one on the daily time frame, and gold was unable to perform as expected.

Now, with the important jobs report and the even more important U.S. Consumer Price Index (CPI) showing January inflation, investors’ focus turns to the June Federal Reserve meeting.

Therefore, it is unlikely that traders will find any new clues about the timing of a rate cut at future Fed meetings.

On Thursday, S&P Global Research Institute will release its preliminary PMI report for U.S. manufacturing and services for February.

An unexpected weakening in private sector business activity, seen falling below the crucial 50 level in the PMI report, could revive expectations of a May rate cut and help XAU/USD rise again.

Keep in mind that influential members of the Federal Reserve may express their opinions on the markets following this important S&P survey.

Traders will be listening closely to these comments as they will have a significant impact on the dollar and gold markets.

Like the NFP report, this survey has a variety of components, so if inflation in the US services sector remains tight, the US dollar could remain strong against its peers and limit global gold gains even after disappointing PMI numbers. Released.

Last week, the lower and upper bounds for gold prices were 1984 and 2031. If we now open the daily gold chart and plot the RSI indicator, we can see that the tip of this indicator is pointing upwards, showing a value of 46.

This means that the market uptrend is currently under control, but remember that the important 50-day moving average, which has served as a strong support level for global gold for several months, has now moved above the gold price.

If gold is unable to maintain important support levels in the coming week, we can expect the daily trend for global gold to change from bullish to bearish.

Key support levels in global gold analysis:

If gold falls, the first important support level will be the important $2000 area. If gold penetrates below this area, the next important price level would be $1990. If market weakness pushes gold lower, the next important level would be $1980.

Key resistance levels in global gold analysis:

disclaimer: This article is written for educational purposes only and should not be considered financial advice.