Can Gold Sustain Positive Levels?
Gold prices are still moving with a positive bias today after strengthening last week. The main driver came from weaker-than-expected US employment data. This has led the market to reduce expectations that the Federal Reserve will raise interest rates in the near future. At the time of writing, gold prices were hovering around US$4,162.
However, gold's rise is not entirely unimpeded. The market is still awaiting the US services PMI data, which will provide new clues about the strength of the US economy. If the PMI remains strong, it indicates that US business activity remains solid. This could encourage the Fed to remain cautious and not fully soften its stance.
From a fundamental perspective, gold continues to receive support from the weakening US dollar and the reduced likelihood of an interest rate hike. Lower oil prices have also helped ease concerns about energy inflation. If inflationary pressures continue to decline, gold typically benefits because the market will perceive that high interest rates need not be maintained for long.
However, US inflation has not yet fully returned to the Fed's target. Therefore, if the PMI data comes out stronger than expected, the market could again interpret the US economy as still running hot. As a result, the US dollar and bond yields have the potential to rise, while gold could correct as investors return to interest-bearing assets.
Technically, the US$4,200 area is a key resistance area that gold needs to break through. If the price is able to rise and hold above US$4,200, the potential for further strengthening could reach the US$4,220 to US$4,250 area. If buying momentum strengthens, the next target could be US$4,280 to US$4,300.
Conversely, if gold fails to break through US$4,200 and PMI data is strong, the price risks falling back to the US$4,160 to US$4,130 area. If selling pressure persists, the next support level is around US$4,100. For today, the bias for gold remains positive as long as it remains above US$4,130, but its next major direction will depend heavily on the US PMI results and the dollar's reaction. (asd)*
Source: Newsmaker.id
