Global Gold Analyticals: March 10, 2024 – Analysis and Forecasts – March 10, 2024
Weekly Technical and Fundamental Analysis of Gold – March 10
After gold prices fell to around $1980 in February, this marked the third straight week that global gold ounces have risen to a record high of $2195.
The biggest reason why gold prices rose was because the U.S. dollar index fell in the overall market along with the decline in the U.S. 10-year Treasury yield.
Important note:
From a technical perspective, it is worth noting that global gold has been in overbought territory for several days. This is especially true in the following cases: important news It is scheduled to be launched on the foreign exchange market next week.
Events in the gold market last week:
On a weekly basis, it must be acknowledged that last week, global gold ounces recorded the highest weekly increase (4.63%) since early February.
On Friday February 29th, gold rose to $1950 and eventually closed at $2044. This set the stage for the launch of global gold ounces early last week.
On Monday, gold opened at $2082 and rose to around $2120. This has led to tech buyers joining the wave and could give gold a good start to its operations.
Then came Tuesday, the day the market awaited the report on the US ISM Purchasing Managers Index.
U.S. data on Tuesday showed the ISM Services PMI decreased from 53.4 in January to 52.6 in February.
The employment index fell to 48, suggesting a decline in wages in the service industry, and the price index, which constitutes inflation, also fell from 64 to 58.6% in the ISM survey.
This important factor has pushed the yield on the 10-year U.S. Treasury note below 4.2%. As a result, a new wave of dollar selling immediately hit the market, continuing gold’s upward trend.
Then came Wednesday, when markets were awaiting the swearing-in and presentation of Federal Reserve Chairman Jerome Powell’s six-month monetary policy report before the Senate Banking Committee and members of the U.S. banking sector.
This session, Powell announced that the only thing that would cause him and his colleagues to start lowering interest rates is the future. economic data.
He emphasized that the central bank is awaiting more evidence that inflation is moving toward the Fed’s 2% target so that we can confidently begin expansionary policy.
Interestingly, when asked about the future state of the U.S. economy, he responded, “There is no reason to think that the economy is on the brink of a recession or will face a recession in the future.”
Chairman Powell also hinted at the approximate timing of the start of the rate cut, but did not completely close the door on rate cuts starting in June!
Meanwhile, as a new wave of risk began in financial markets mid-last week, traders again Risky assets. As a result, the value of the dollar began to fall and global gold continued to rise.
Early Thursday, China, the world’s largest consumer of gold, announced its trade surplus increased from $75.43 billion in December to $125.16 billion in January and February.
The released figure exceeded expectations of $103.7 billion, sending global gold prices higher in 2019. Asian trade session.
Then, in the second half of the year, the U.S. Bureau of Labor Statistics (BLS) lowered unit labor costs for the fourth quarter from the original estimate of 0.5% to 0.4%, causing the U.S. 10-year yield to fall to its weakest level. Last month, it fell below 4.1%.
Additionally, the U.S. Department of Labor reported that the number of unemployment claims (meaning people receiving unemployment insurance for the first time) was 217,000 in the week ending March 12, similar to the previous week’s figure.
With this news, the price of gold soared to around $2,164, setting a new record for the first time in a long time.
Friday finally came. A day when the entire market awaits an important report on US employment, i.e. NFP.
Last Friday, the BLS reported that U.S. nonfarm payrolls increased by 275,000 in February. It is worth noting that this figure exceeded economists’ predictions of 200,000 but fell short of January’s figure of 353,000!
Other details in the report show that the unemployment rate increased from 3.7% to 3.9%, while the labor force participation rate remained stable at 62.5%.
The US dollar index also began to fall in response to the NFP news, while global gold once again reached another historic high at $2195.
Next week’s events in the Forex and Gold markets:
The first major news (not gold-related, of course) coming out next Tuesday is the UK jobs report.
The most important news this week is the February US Consumer Price Index (CPI) report released on Tuesday.
both Monthly CPI and core CPI excluding food and energy are expected to rise by 0.4% and 0.3%, respectively.
Therefore, it is unlikely that the February CPI report scheduled to be released next Tuesday will significantly change the market position.
The only way to change the market’s attitude about when interest rates will start to fall from June to May is if monthly net CPI numbers near zero are released!
- If this happens, the US dollar will come under strong selling pressure and gold will be extremely strong.
- Additionally, note that while a significant rise in February’s core CPI report may lead market participants to the view that there will be no rate change from the Fed in June, the initial reaction to this news could cause gold prices to undergo a downward correction. .
On Thursday the US is scheduled to release its February retail sales report, followed by the Federal Reserve’s February industrial production data on Friday.
Important note:
Meanwhile, as is customary before the official March meeting on March 19 and 20, the Federal Reserve will enter a period of silence known as the blackout period.
In fact, traders will be looking for key technical points to find good trading opportunities after the important inflation report on Tuesday.
Weekly technical analysis of gold:
Last week, the lower and upper limits of gold price were 2079 and 2195.
If you open today’s daily chart and draw the RSI indicator, you can see that the end of this indicator is moving upward from the overbought zone and is showing 84.
This indicates that not only is the momentum still in the hands of the market bulls, but the price has entered overbought territory for some time and a correction should begin at any time.
At this time, if you draw a rising channel on the daily chart, you will see that global gold has broken through the upper part of this channel!
If you remember, last week We mentioned that we can expect the upward trend in global gold ounces to continue on a daily basis if gold can settle firmly above this important support level in the coming week (meaning the week just passed), which is exactly what happened. It happened.
Overall, remember that in the week when the important US inflation report is scheduled to be released, gold should first correct slightly and that path will be determined by the CPI report.
Key support levels in global gold ounces analysis:
If gold falls, the first important support level will be the important area of $2,160. If gold penetrates below this area, the next major price level is $2150. If market weakness pushes gold lower, the next important levels would be $2140 and $2130.
Key Resistance Levels in Global Gold Ounces Analysis:
If gold moves higher, the first important resistance level will be $2185. If gold successfully passes this area, the next major level is $2190. If market strength pushes gold prices higher, the next resistance level would be $2200.
disclaimer: This article is for informational purposes only and should not be considered financial advice. Please consult a qualified financial advisor before making any investment decisions.
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