• Gold rebounds strongly from its 2024 low
• Challenges 50-day SMA and ascending trendline
• Momentum indicators turn neutral-to-positive
• Core PCE price index to be crucial for markets amid sticky inflation fears
• Income and consumption to be watched too as US economy stays hot
• But can further upside surprises boost the dollar on Thursday, 13:30 GMT

Gold has been regaining ground in the past few sessions, following its bounce off the 2024 bottom of 1,984. Although the price has recouped a significant part of its losses, it has currently stalled at the congested region that includes the 50-day simple moving average (SMA) and the ascending trendline that connects the higher lows since December.

Should bullish pressures persist, bullion could challenge the 2,044 hurdle, which acted as resistance both in December and February. Failing to halt there, the price may advance towards the February high of 2,065. An upside violation of that zone could open the door for the crucial 2,079-2,088 range.

Alternatively, if the price reverses back lower, the January support zones of 2,008 and 2,001 could act as the first lines of defence. Further declines might then cease around the 2024 bottom of 1,984. Even lower, the December low of 1,973 could provide downside protection.

Slowing consumption could be a good thing

Investors will also be watching the latest numbers on personal income and personal consumption that will be released alongside the PCE price indices. Personal income is expected to have increased by 0.4% m/m in January versus 0.3% in December. More importantly, personal consumption is forecast to have risen at a more moderate pace of 0.2% in January after surging by 0.7% in December.

A slowdown in consumer spending could ease concerns about an overheating economy and so would likely be welcomed by equity markets, though not so much by the dollar. However, markets would not react as positively if there’s a sudden deterioration in consumption as investors are positioned for a soft landing in the US economy. Anything that questions that view would weigh on risk sentiment.

Also coming up 

In other data due this week, durable goods orders for January will be watched on Tuesday, along with the consumer confidence index for February. On Wednesday, the second estimate of Q4 GDP might attract some attention, though no change is anticipated to the advance estimate of 3.3% annualized growth.

Closing the week on Friday will be the ISM manufacturing PMI for Friday. It’s expected that manufacturing activity improved slightly in February, with the PMI edging up to 49.5.

Prepared by: Mr.SAM KIMA, Senior Vice President