Gold opened this week’s trading on a slight rise, as it gained some positive momentum on Monday, where the Bollinger Bands are providing positive signals as the price moves above its lower level. Meanwhile, the price is eyeing a breach through the indicator’s middle line, where stability above it would help prices resume their bullish trendline in the medium term.
Meanwhile, gold is trading above the weekly pivot point at $3021, looking forward to retesting the breached lower line of the bullish channel. A sustained move above it could lead to further gains towards resistance levels of $3060 and then $3096.
On the downside, if gold fails to break above the breached lower line of the bullish channel, it may indicate a loss of momentum, potentially driving the price lower to the first support level at $2985. A break below the aforesaid level may drive prices downward to $2946.
Investors are waiting for key economic data later this week, particularly related to the Core Personal Consumption Expenditures index, the Federal Reserve’s favorite inflation measure. Analysts expect annual Core PCE inflation to rise from 2.6% to 2.8%. A higher-than-expected reading could prompt the Fed to reconsider cutting interest rates soon.
However, the services and industrial sectors in major economies are likely to grab attention. If the data exceeds expectations, it could negatively impact gold prices. On the flip side, improvement in these sectors could have a positive effect on their economic activities.
In addition, markets are awaiting U.S. Gross Domestic Product (GDP) for the fourth quarter last year. Economic growth is expected to remain at 1.4%, the same rate as the previous reading. If the data comes in better than expected, it may boost investor confidence in the strength of the U.S. economy, which could have a negative impact on gold prices.
Finally, President Donald Trump’s trade policies are likely to come under scrutiny this week, as Trump announced a temporary postponement of 25% tariffs on most goods imported from Canada and Mexico until April 2. The postponement covers products that were included in a previous trade agreement signed during Trump’s first term in office.