The Gold Spot (XAUUSD) are enjoying a great week as increased concerns of inflation and the economic outlook following the surprise oil supply cut announcement by OPEC+ on Sunday paired with the US economic data, which showed signs of slowing labour market and economic activity. The elevated concerns have helped the yellow precious metal break through the $2000 an ounce threshold as the US dollar continues to fall on increased speculation that the Fed could be nearing its’ monetary policy tightening.

The CME FedWatch Tool suggests that investors’ outlook on the probability of interest rates in the US is slightly skewed towards a potential rate pause. Increased rate pause sentiment could continue to squeeze the greenback in the short term, with major central lacking signs of abandoning their monetary policy tightening in their efforts to bring down inflation. The decline of the greenback could continue to push the yellow precious even higher, even though the upside could be limited as investors turn their focus to the Nonfarm Payroll data on Friday.

Technical

With the recent breakthrough above $2000/ounce, a possibility for the price action to slightly consolidate as investors take profit off the table before consolidating their position and continuing higher if the US data continues to show signs of a cooling economy.

With the lack of psychological levels above the current price level of the precious yellow metal, the reaction around the daily pivot point could be key to the movement of the price action. With a sustained move above the pivot point, the bulls could look to break above the $2049.88/ounce resistance level as a possible level of interest. A breakthrough above the initial resistance level could bring the $2059.19/ounce resistance level into play as the bulls look to test the all-time high at $2075.21/ounce.

However, a possibility could exist that the bears could pull the price action below the $1987.72/ounce support level if the price action fails to hold above the pivot point. Increased selling pressure could further push the price action lower towards the $1943.94/ounce support level, with the breakthrough below leaving the 50-day moving average as the next hurdle towards the bears’ run.

Summary

The lack of technical resistance above the current price of the non-yielding bullion could entice the bulls to test the all-time high in the short term. Thus, opportunities could exist at the $2059.88/ounce and $2059.19/ounce price levels as the bulls look to launch an attack at the $2075.21/ounce price level.

Sources: TradingView, Reuters,

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