Is Gold’s Rally Losing Momentum?

The soft CPI data, which continued to weaken the US dollar, nudged the Gold Spot Price (XAUUSD) 0.56% higher during the Wednesday trading session. The US CPI figures of 5.0% for March were below the forecasted 5.2% and 1% lower than the 6% in February last year. The slower-than-expected economic cooling refuelled the concerns of a potential global recession which could help the gold spot in its pursuit of testing the non-yielding bullion’s all-time high of $2075.21 an ounce.

The precious yellow metal has been enjoying quite a recovery as it is on course to close a second consecutive week in the green, with the price action trading 1% higher for the week. However, bets on a 25-basis point rate hike in May could cap the commodity’s upside, with 63.9% of the market currently pricing in a 25-basis point next month.


The non-yielding bullion spot price is currently trading within a rising wedge pattern, with the lower trendline of the wedge and the 50-day moving average acting as the immediate support to price action. The gold spot found support at the 23.60% Fibonacci retracement level following a retracement from the bullion’s 13-month high last week.

The rejection of the 23.60% Fibonacci retracement level triggered a bullish reversal. The bulls could hope that an extended rally would help them break above the previous Achilles heel for the bulls, the $2032.42 an ounce resistance level. The declining volume could make it difficult for bulls to sustain a breakthrough above the level. Nevertheless, a breakthrough above the level would bring the $2049.88 an ounce resistance level and the all-time high of $2075.21 an ounce into play.

However, a failure to break or sustain a break above the $2032.42 an ounce resistance level could entice the bears to push the price lower. A break below the 50-day moving average could trigger the $1987.72 an ounce support level into play. The following support may lie at the 23.60% Fibonacci retracement level and $1943.96 an ounce price level.


The recent macroeconomic data from the US, which raised concerns about a potential global recession, have been bullish for the non-yielding bullion. A short-term trading opportunity could exist as the price action breaks above the $2032.42 an ounce resistance level, but a move towards the $2049.88 an ounce resistance level could prove more of a marathon with tailwinds rather than a sprint.

Sources: TradingView, Reuters, Dow Jones Newswire.

DISCLAIMER:This report has been prepared by our Group company. This document is not intended as an offer, solicitation or recommendation to buy or sell financial instruments or to make any investment. The Group has used reasonable efforts to obtain information from reliable sources and the report is provided without representation or warranty of any kind (neither expressed nor implied).  The Group disclaims liability for any publication not being complete, accurate, suitable and relevant for the recipient. Specifically, the Group disclaims liability towards any user and other recipients of this report.