Gold Price All-Time-High Party Over As US Dollar Aggression Continues

Summary:
• Unlike the recent run that saw gold prices set multiple all-time-highs, strong US dollar fundamentals have short down the commodity faster.

Gold prices slipped further on Friday as a strong US dollar prevailed. The US economy printed out strong data on Thursday, bringing down the precious metal from new all-time highs recorded less than 24 hours earlier. Spot gold traded at $2167 at the time of writing, having faced rejection at $2223 on Thursday. 

Gold prices had been on the rise for the better part of Thursday, going against the grail as most currencies lost ground against the dollar following Wednesday’s Fed interest rate decision. However, tables turned when three key US macroeconomic data came out better than expected.

First, first-time jobless registrations fell below the forecast 212k to come in at 210k. Concurrently, US manufacturing industry showed muscle in March, with the preliminary S&P Global US Manufacturing PMI growing to 52.5, beating the forecast 51.8.  However, the services PMI declined marginally to 51.7 from February’s 52.3, missing the forecast 52.0.  In addition, new US Home Sales rose by 380k to 4.38 million, higher than the forecast 3.95 million.

These figures have put the dollar in a strong upside trajectory, adding to the support provide by the Fed’s interest rate decision. However, the Fed indicated that three rate cuts are likely to come in 2024, and this will curtail the downside for gold prices. Also, US Treasury yields have gone down by 2 basis points on the benchmark 10-year yields, and this could provide more support for gold. However, safe haven gold’s strength could be undone by news of a prospective Israel-Hamas ceasefire.

Technical analysis

Gold price pivots at 2178.00, and the sellers will be in control if the commodity continues to trade below this mark. The bearish momentum could break the support at 2154, and possibly go as low as 2145 in extension. However, a return of action above 2178.00 will swing the momentum towards the upside, with the resistance at 2186.00 in focus. A continuation of control by the buyers at this point will break the resistance and possibly have a go at 2192.