Gold Prices Drop Amidst CPI Data Release
The CPI data release is expected to show inflation above the Federal Reserve's 2% goal, which could impact the gold price forecast. The Bank of Canada's decision on monetary policy, with a 25 basis point interest rate cut expected, will also be closely watched by investors.
Gold prices have fallen below $2900, despite a decrease in Treasury yields, as traders take profits and wait for additional positive catalysts, with the US set to publish February Consumer Price Index (CPI) figures.
The XAU/USD pair has turned bearish in the near term, with the US Dollar finding near-term demand despite a risk-averse environment. The absence of relevant macroeconomic news has fueled sentiment-related trading, keeping XAU/USD between a rock and a hard place. The gold/silver ratio has risen above 90, potentially pushing silver below $32.00 and towards $31.45-$31.75.
From a technical point of view, the daily chart for XAU/USD shows the metal remaining below a flat 20 Simple Moving Average (SMA), providing dynamic resistance at around $2,910.00. The longer moving averages keep heading north far below the current level, suggesting bulls maintain control in the long run. Support levels are at $2,881.80, $2,867.10, and $2,854.95, while resistance levels are at $2,910.00, $2,927.90, and $2,941.40.
As the US publishes its February CPI data, investors will be watching closely to see if inflation eases modestly from January levels, and how the Bank of Canada's decision on monetary policy will impact the market. With the XAU/USD pair at risk of extending its slide, traders will be looking for additional catalysts to drive the price of gold.
