The US Dollar encountered renewed selling pressure following the American market opening on Wednesday, influenced by the latest US Consumer Price Index (CPI) data. The CPI rose 0.2% month-on-month in February, with the annual figure standing at 2.8%. Despite this, the broad weakness of the US Dollar has kept spot gold trading within familiar levels, providing some stability to the precious metal. However, this has not translated into increased demand for gold.
Spot gold continued to trade steadily through the first half of Wednesday, supported by technical indicators pointing upwards above their midlines. The 200 Simple Moving Average (SMA) remains on an upward trajectory, positioned well below shorter moving averages, indicating a potential for future gains. The improving market sentiment, following the release of February's US CPI data, helped limit losses for gold, although the US Dollar's recovery gains have made it challenging for the pair to regain its traction fully.
The current market conditions see the 100 and 200 SMAs heading firmly north, far from the current level, suggesting underlying support for spot gold. The pair is also resting above a flat 20 SMA, offering support at approximately $2,912.50. Despite these technical supports, the Momentum indicator is presently stuck around its 100 line, reflecting a temporary pause in significant momentum shifts.
February's US inflation figures showed a slight easing, with the CPI indicating a less-than-expected rise in consumer prices. Core annual inflation increased by 3.1%, with all figures reported falling below market expectations. This development has provided a slightly positive risk mood in the markets, which has helped to stabilize gold prices.
Gold is presently developing above all its moving averages, with converging 20 and 100 SMAs offering additional support around the daily low. This configuration suggests a technical foundation is in place to potentially support further price movements, should external factors align favorably.
However, the US Dollar continues to cling to its daily recovery gains, posing a challenge to gold's ability to regain significant traction. The interplay between currency strength and commodity prices remains a key factor influencing gold's price dynamics.
Analysts suggest that while the current technical setup indicates support levels beneath the spot price, broader economic indicators and policy decisions will play critical roles in determining gold's trajectory in the near term. Observers are closely watching upcoming economic data releases and Federal Reserve communications for further clues on market direction.