January ECB meeting, typically subdued economic data have still generally come in a little stronger than expected. Econoday’s relative performance index (RPI) averaged 6 over the period and its inflation-adjusted counterpart (RPI-P) 9. Both readings show market predictions slightly biased to the downside, albeit more with regard to the real economy than prices. Even so, the magnitudes are small enough to suggest that there will be no major change to the bank’s December GDP forecast.

The minutes of the January ECB meeting showed that the majority of GC members saw more risks in easing too early than too late. Having won back at least some credibility on the back of the slide in inflation since late in 2022, the bank is desperate not cut interest rates only to have to raise them again should inflation re-accelerate. This increases the likelihood that, despite probable calls from the doves for an earlier move, policy will stay on hold until at least May. That said, if the new forecasts show inflation below target by the end of the projection horizon, financial markets will no doubt be contemplating a cut as soon as April.

Gold (XAU/USD) recorded its highest weekly gain of 6% year-to-date on 1 March 2024, and its best weekly return seen in the past three months.

Positive technical elements and a softer real US 10-year Treasury yield below 2.15% support a potential major bullish breakout scenario for Gold (XAU/USD).

Gold (XAU/USD) potential bullish breakout trigger level stands at US$2,090. Recording a beautiful high of US$2120.

In the last two weeks, the price actions of Gold (XAU/USD) have started to jolt to the upside after a lull period of sideways movement since late December 2023. It has managed to record a weekly gain of 2.33% for the week ended 1 March 2024, its best weekly gain so far year-to-date and in the past three months.

Interestingly, last week’s fifth attempt has managed to form a bullish candlestick pattern, a weekly bullish Marubozu right below US$2,090, and the prior four attempts did not yield such bullish candlestick-based price actions.

In addition, the weekly RSI momentum indicator has formed a “higher low” above the 50 level and has not reached the overbought region (above 70). These observations suggest that medium-term upside momentum is likely to have resurfaced. The next medium-term resistance zone to watch after US$2,090 will be at US$2,210/US$2,260

If the US$2,040 key short-term pivotal support holds in any potential pullbacks, the price actions of Gold (XAU/USD) are likely to evolve within short to medium-term bullish configurations. The next intermediate resistances to watch after US$2,090 (bullish range breakout level) are likely to be at US$2,117 and US$2,149 (current all-time high printed on 4 December 2023) in the short term. IM A BUYER ON ANY KIND OF DIPS. BOOK PROFITS AND THEN WAIT FOR RETACEMENT AND BUY AGAIN. Use this strategy for todays ranges AND DONT FORGET STOPLOSSES ok.

Prepared by: Mr. SAM KIMA, Senior Vice President