The Gold Spot prices (XAUUSD) are on a recovery path as the bulls look to regain the ground lost to the bears overnight following the stunning announcement of a major oil supply cut by the Organization of the Petroleum Exporting Countries and their allies including Russia (OPEC+). The announced 1.16 million per barrel a day cut sparked inflation concerns and sent shockwaves in the markets, with the precious yellow metal falling over 0.55% during the Asian trading session as investors speculated on a US Fed’s rate hike path with the FedWatch suggesting that 63.5% investors are betting on a 25 basis point rate hike up from 48.4% from the day before.
The gold spot price regained some losses during the European trading session as investors turned their focus on the central bank policy ahead of the manufacturing PMIs in the US and the Eurozone later today. The Friday data showed an acceleration in the core prices in Eurozone which could support the need for a rate hike by the European Central Bank (ECB). In contrast, the lower-than-expected core inflation figure in the US made a case for a possible rate pause by the Fed. The shift in sentiment sent the precious yellow metal higher and weighed down the greenback during the trading session.
Technical
The recent failure by bears to break below the psychological level at the support level of $1950.16 an ounce could give the bulls optimism to try and push the price action above the 23.60% Fibonacci level, which could be a real test for the bulls’ run ahead of the manufacturing PMIs later today. A sustained move above the level could push the price above the resistance level of $2990.57 an ounce, a level of interest for the bulls. The bulls could push the price action towards the $2009.80 an ounce resistance level if the breakthrough above the resistance level is supported by significant volume. Lack of volume could make it hard for the bulls to test the $2009.80 an ounce resistance level in the short term.
The bears could be hoping that the manufacturing PMI can swing the sentiment in their favour and could look to retest the support level at $1950.16 an ounce. A sustained breakthrough below the initial support could bring the support level of $1934.22 an ounce and the golden ratio into play.
Summary
With investors focusing on the manufacturing PMI data later today, the non-yielding bullion could be range-bound with Friday’s Nonfarm Payroll (NFP) data firmly in the back of investors’ minds. Thus, a trading opportunity could exist for the bulls at the $1990.57 an ounce price level, with the bears looking at a breakthrough below the $1950.16 an ounce as a confirmation of bearish sentiment.
Sources: TradingView, Reuters, CNBC.
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