The price of gold flirted with record highs on Friday during the Asian session, hovering around $2,230. Safe-haven flows amid mounting economic worries and the possibility of a US Federal Reserve interest rate reduction supported the yellow metal’s surge.

Technical Overview

There is still potential for price growth in gold because the Bull Flag target of $2,251 may continue to inspire investors.

Gold dealers must first establish a stable footing above the record high of $2,236 to continue the rise.

The $2,300 round barrier will be the next target for gold purchasers.

The 14-day relative strength index (RSI) is in the overbought area, indicating that a decline may be imminent before the subsequent rebound.

Conversely, any pullback is expected to find support at the prior all-time high of $2,223, below which the $2,200 barrier may be tested.

Buyers may find support farther south at the bullish 21-day Simple Moving Average (SMA) around $2,167.

Fundamental Overview

To determine how the market is pricing a possible interest rate decrease by the US Federal Reserve (Fed) in June, traders are watching the US Personal Consumption Expenditures (PCE) Price Index closely, which is expected later on Friday.

 

The Fed’s probability of lowering rates in June is currently priced into the markets at around 64%, down from the roughly 70% possibility observed at the beginning of the week. The Fed’s officials’ numerous hawkish remarks and worries about sticky inflation have tempered expectations for rate decreases this year.

The US dollar continued its slow comeback from last week, and on Good Friday, it is expected to close in on six-week highs. The US Dollar gained strength on Thursday as the fourth-quarter annualized GDP statistics were revised upward from 3.2% to 3.4%.

However, the rise in the US dollar did not stop buyers of gold as the shiny metal set new records. Rising geopolitical tensions between Russia and Ukraine and the Fed’s dovish interest rate forecast are positive factors supporting the gold price.

The Fed’s favored inflation gauge, the Core PCE Price Index, will dictate the next move in the price of gold and will also set the tone for markets in the upcoming weeks. February had a 2.5% increase in the headline annual PCE Price Index, faster than the 2.4% increase in January. The stickiness of inflationary forces is suggested by the Core PCE inflation, which is expected to remain stable at 2.8% during the given period.

Even though US stock markets had their best first quarter since 1990, the price of gold closed at all-time highs in the first quarter of this year.