Gold turned south following a record-setting upsurge on Wednesday and erased the majority of its weekly gains, as the upbeat data releases from the US offset the negative impact of the Federal Reserve’s policy decisions on the US Dollar’s (USD) valuation.

Gold price made a sharp U-turn after touching new all-time high
Gold started the new week in a quiet manner as investors refrained from taking large positions ahead of the Federal Reserve’s (Fed) highly-anticipated March policy meeting. XAU/USD fluctuated between $2,150 and $2,160 on Monday and Tuesday, closing both days virtually unchanged.

Gold price could have a delayed reaction to US PCE inflation data
The US economic docket will feature Durable Goods Orders data for February and the Conference Board’s Consumer Confidence Index for March on Tuesday. On Thursday, the US Bureau of Economic Analysis (BEA) will release the final revision to the fourth-quarter Gross Domestic Product (GDP) and publish the Personal Consumption Expenditures (PCE) Price Index data for February on Friday.

Markets expect the annualized fourth-quarter GDP growth to be confirmed at 3.2%. The market reaction to the GDP data could be straightforward and remain short-lived. An upward revision is likely to support the USD and weigh on XAU/USD, while a downward revision could weigh on the currency.

Although the PCE Price Index is usually watched closely by market participants, the trading action is likely to remain subdued on Friday with stock and bond markets remaining closed in observance of the Good Friday holiday. Hence, a delayed reaction could be witnessed at the weekly opening on Monday. A stronger-than-expected increase in the monthly Core PCE Price Index could support the USD at the beginning of next week. On the other hand, a print below the market consensus of 0.3% could help Gold gain traction.

The Pound Sterling (GBP) failed to hold its upswing against the US Dollar (USD), as the GBP/USD correction from seven-month highs of 1.2894 regained traction in the central banks’ bonanza week.

Dovish BoE vote split pounds the Pound Sterling 
The policy outlooks announced by the US Federal Reserve and the Bank of England (BoE) remained the key drivers for the GBP/USD price action in the past week. But the selling momentum around the Pound Sterling was unabated, as the US Dollar kept its bullish tone intact, despite a brief pullback midweek.

Japanese Yen rebounds broadly today, likely driven by traders taking profits on short positions after a significant week of sell-off following BoJ’s rate hike. This stabilization comes amidst speculations stirred by Japan’s latest inflation data, raising the prospect of a second hike by BoJ in the second half of the year. Nevertheless, such predictions seem premature at this juncture. Additionally, the decline in benchmark yields from Germany and the UK has provided some support to Yen.

Meanwhile, Dollar is trading as the second strongest currency for the day, albeit with signs of losing momentum as the week draws to a close. This slight pullback could be attributed to profit-taking activities as well. In contrast, Australian Dollar and New Zealand Dollar are facing downward pressure, trading up as the day’s underperformers. Both currencies face additional pressure due to the sharp decline in Chinese Yuan, which hit a four-month low. European majors present a mixed picture, with Sterling notably underperforming compared to its counterparts.

STRATEGY

BUY GOLD 2140 exit 2170

SELL GOLD 2175 exit 2140

BUY GBPUSD 12560 exit 12660

BUY EURUSD 10780 exit 10865

BUY USDJPY 15079 exit 15170

Have a great trading week ahead and please don’t forget to place stoplosses on each and every transaction.

Prepared by: Mr. SAM KIMA, Senior Vice President