According to recent Consumer Price Index (CPI) data, the annual inflation rate is 3.1%, higher than economists' predictions of 2.9%. Additionally, the Producer Price Index (PPI) also exceeded expectations, rising by 0.3% compared to December of last year. Both major inflation indicators have exceeded market expectations, significantly reducing the possibility of the Federal Reserve cutting interest rates in March or even June. This suggests that the US economy is stronger than expected, lowering expectations of rate cuts and thus adversely affecting gold bulls. 

Furthermore, the ongoing escalation of the Israel-Hamas conflict continues to create a tense geopolitical situation, sustaining demand for safe-haven assets like gold. However, the complexity of the Federal Reserve's interest rate cut prospects is restraining bullish performance in gold. According to meeting minutes from January 30th to 31st, most policymakers also expressed concerns about the risks of cutting interest rates too early. Later, market focus may shift to the non-farm payroll report released on March 8th to find further clues about the timing of rate cuts. Therefore, amid the mixed background of bullish and bearish factors, gold is still in a period of significant volatility without a clear direction. 

From a technical standpoint, looking at the daily chart, gold prices are currently consolidating near recent highs around $2,035 after rebounding from the $1983.53 region, which is located around the 61.8% Fibonacci retracement level. Compared to previous rallies, the momentum of this rebound is weaker. From a chart pattern analysis, if the rally is to continue, it should be characterized by a strong upward movement rather than a gradual oscillation. Therefore, personally speaking it is understood that this rally is temporary and a stronger intra-day bullish candle is needed to confirm the upward trend. 

However, current gold prices are approaching recent resistance levels, increasing the risk of a short-term pullback. Investors need to pay attention to whether the $1,983 level below will be breached. If the downward pressure is too strong, it may trigger a larger decline, indicating that this rebound is only a correction within the early downtrend rather than a resumption of the upward trend. Another important support level below is at $1,934. If gold can hold above these price levels, further upside potential can still be expected. On the other hand, if the above-mentioned support area is breached, gold prices may retest key support levels at $1,850 to $1,879.

Hugo Leong

Gold Analyst of Hantec Group