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Gold Price Eases From ATH On US Inflation Data Anticipation

Gold prices eased down from all-time highs on Wednesday, with spot gold going down by -0.20% to trade at $2347 an ounce. Meanwhile, futures gold was at $2365, down from Tuesday’s ATH of $2384. Buyers seem to have slowed down their activities ahead of the release of US CPI data, which could have a bearing on the strength of the US dollar.

The March Core CPI reading is forecast to decline to 0.3% from February’s 0.4%. The headline CPI is also expected to print out the same figures, with the annualized CPI forecast to read 3.4%, an increase from the previous 3.2%.  A softer inflation figure will support the recent hawkish statement by Minneapolis Fed President Neel Kashkari. Kashkari stated last week that he expects two Fed rate cuts in 2024, mirroring the growing feeling that a June interest rate cut is unlikely if inflation remains manageable amidst strong US economic data.

Gold continues to enjoy safe haven support after Hamas rejected Israel’s latest ceasefire proposal. This came on the heels of Israel Prime Minister Benjamin Netanyahu’s statement on Monday that the Rafah offensive option is still on the cards. The war rhetoric favours gains by gold, even as the US dollar remains strong.  Furthermore, the dollar has support from high yields on US Treasuries which stand above 4.300% on the benchmark 5-year and 10-year bonds.

Gold prices could also get new volatility later on Wednesday when the minutes of the March meeting by the Federal Open Market Committee (FOMC) come out. Furthermore, Fed member Michelle Bowman’s statement could inject some impetus.

Technical analysis

Gold price faces resistance at 2353, and the downside will prevail as long as the sellers keep the price below that level. That could see the commodity head down further to break the support at 2343. A continuation of control by the sellers at that point could see further decline to test 2338. Alternatively, a move above 2353 could provide momentum to breach the next resistance at 2358, and potentially test 2364 in extension.