Gold Price Pauses March to $2200 As Buyers Wait For CPI Data

Summary:
• Gold is consolidating after consecutive10-day rally, that saw it hit multiple ATHs before meeting rejection at the psychological $2200 mark.

Gold price headed lower on Tuesday, as its ten-day rally cooled ahead of the US CPI data release. The yellow metal traded at $2176 per ounce, down by -0.28% at the spot market, at the time of writing.  Similarly, gold futures edged lower by -0.23%, to trade at $2183. The commodity’s march towards $2200 has been halted for now, but the safe haven sentiment around it remains strong.

The US Core CPI (excluding food and energy) data for February is expected to show a decline in the inflation rate from 0.4% to 0.3% month-on-month. However, the overall inflation rate is forecast to rise by 0.1% to 0.4% month-on month. Furthermore, the year-on-year headline inflation is forecast to stay unchanged at 3.1%, which is still above the 2% rate targeted by the Fed.

The Fed has already pronounced itself on a likelihood of a rate cut this year if inflation figures are proven to have come down to sustainable levels. This has sent the market betting on a June rate cut, creating a downside momentum around the dollar. In the context of XAUUSD, the dovish sentiments by the Fed have exerted downward pressure on US Treasuries, leading to a significant decline in yields and swinging the scales in favour of gold.

Safe haven gold could yet find some upside momentum from the uncertainty surrounding the Israel-Hamas ceasefire negotiations ahead of the Ramadhan. Earlier in February, Israel’s war cabinet member Benny Gantz had indicated that a ground offensive into Rafah would happen if the remaining hostages were not released by March 10^th. The passing of the deadline could help spur up demand for gold.

Technical analysis

Gold prices are currently consolidating, and buyers will need to push for control above the $2185 pivot to support upside momentum. If they succeed in doing that, they could break the $2195 resistance and test the next resistance at $2205. However, the momentum will favour the seller as long as resistance remains below the $2185 pivot. That could see XAUUSD break the $2168 support, thus invalidating the bullish narrative and setting the stage to head lower to $2162.