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.

Technical

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.

Summary

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.

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