- Gold price is set for a fresh upside rally after breaching the demand zone in a $1,768.32-1,772.22 range.
- A higher US PCE print indicates that rising interest rates are failing to slow down the inflation rate.
- The US ISM Manufacturing PMI is expected to remain lower at 52 vs. 53 reported earlier.
Gold Price (XAU/USD) is expected to carry forward the optimism displayed last week in the Asian session as accelerating recession fears in the US economy have underpinned the appeal for the precious metal. The bright metal turned sideways after printing a fresh three-week high around $1,768.00, however, the upside remains warranted despite soaring price pressures in the US economy.
On Friday, the US Personal Consumption Expenditure (PCE) landed at 6.8%, higher than the expectations and the prior release of 6.7% and 6.3% respectively. Well, an improvement of 50 basis points (bps) in the Federal Reserve (Fed) preferred tool of inflation indicator displays no signs of exhaustion in the price pressures. However, recession fears have escalated abruptly.
In today’s session, investors will keep an eye on the release of the US Institute of Supply Management (ISM) data. The ISM Manufacturing PMI is likely to shift lower to 52 from the prior release of 53. A drop in Manufacturing PMI indicates that vigorous interest rates elevation by the Fed has started displaying its consequences, however, inflation has not got caught now, which is a big reason to worry. However, the New Orders Index is warranting a decent improvement as the economic data is seen higher at 52 vs. the prior release of 49.2. This displays that consumer spending is gaining sharply despite the runaway inflation.
Gold technical analysis
On an hourly scale, the gold prices are facing minor barricades around the supply zone placed in a $1,768.32-1,772.22 range after a juggernaut rally. The precious metal is hinting a time correction ahead in hopes of attracting more bids.
Advancing 20-and 50-period Exponential Moving Averages (EMAs) at $1,762.03 and 1,753.25 respectively adds to the upside filters.
Also, the Relative Strength Index (RSI) (14) is attempting to get back inside the bullish range of 60.00-80.00, which will underpin an upside momentum again.