Gold Price Hits New ATH As Safe Haven Buying and Weak Dollar Provide Propulsion

Summary:
• Gold prices are being pushed up by weak fundamentals around the US dollar, as central banks and retail buyers also turn to bullion gold.

Gold prices printed new all-time highs on Friday, as safe haven buying provided tailwinds for the commodity. The yellow metal traded at $2,175 an ounce at the futures market, while spot gold traded at $2168. Gold has risen consecutively for the past seven trading sessions, as many investors bet against the dollar.

Macroeconomic conditions in the United States have weighed down the US dollar, underlined by a dovish market sentiment. Federal Reserve Chairman Jerome Powell, in his Congress testimony this week, confirmed that there will be US interest rate cuts this year. The market consensus favours a June rate cut, and this will erode the dollar’s strength in the medium term.

Gold prices have also got support from declining US Treasury yields, which have fallen to 4.0 % on the 5 and 10-year bonds as of this writing.  In addition, the US dollar lacks support from macroeconomic outlook after a series of lower-than-expected printouts. In the latest such release, the Initial Jobless Claims figures met forecasts, showing an additional 217,000 jobs to the US economy. However, Continuing Jobless Claims rose to 1,906 K, poorer than the projected 1,889 K.

The XAUUSD trading pair’s trajectory awaits the release of three key US data. Key among these wil be the Nonfarm Payrolls figures for February, which is expected to provide an overview of the US labour market. In addition, the Department of Labor will release the February Unemployment Rate and Average Hourly earnings.

Outside the United States, there’s a notable increase in safe-haven buying of gold. This is underlined by a slowdown in economic activity in China, Japan and the Eurozone. Furthermore, central banks have also been building up their gold reserves in recent times. For instance, China’s central bank added 390,000 troy ounces in February-the sixteenth straight month of purchase by the bank.

Technical analysis

Gold price pivots at $2155, and the bullish RSI signals upside action. The buyers will need to stay above the $2155 level to break the $2179 resistance. Extended control will favour further gains to potentially test $2185. However, control could shift to the sellers if the price goes under $2155. That could see them break the $2148 support on extended control, invalidate the bullish view and target the next support at $2139.