Spot gold bulls show signs of hesitation as a spinning top pattern emerges
On Thursday, the price of precious metals saw minor losses due to renewed demand for the U.S. Dollar (US DXY) to 103.95, causing a reversal in their bullish performance.
Earlier, positive economic data added to investor optimism, with U.S. jobless claims unexpectedly dropping by 2,000 to 210,000 last week and February's existing home sales showing a surge, indicating a strong first-quarter economy.
The recent bullish price action was supported by the U.S. Federal Reserve's reassurance on potential rate cuts.
According to a survey of policymakers, the median still anticipates three interest rate cuts in 2024, with the possibility of the first cut by June.
After Wednesday's policy meeting, Fed Chair Jerome Powell stated that inflation reports haven't significantly altered the overall narrative, which involves inflation gradually declining on a sometimes-uneven path toward 2%.
The Federal Reserve maintained its benchmark interest rates of 5.25% to 5.50%, with the next Fed meeting scheduled for April 30 to May 1.
Based on technical analysis, the Relative Strength Index (RSI) 3-day 'lookback' indicator is positive but buckled.
The Moving Average Convergence Divergence (MACD) is also positive but weak, and the ADX indicator supports a weak bull trend.
With a potential bearish spinning top in place, traders should exercise caution due to expected high volatility.
This pattern suggests further weakness and a possible reversal, characterized by a small real body with long upper and lower shadows during an uptrend.
Currently, a neutral bias remains.
Daily Chart Spot Gold
This content is provided by Australian Financial Services Corporation (AFSC) Pty Ltd (AFSC), trading as Crystal Ball Finance. AFSC is a corporate authorised representative (CAR No. 001275455) of ShareX Pty Ltd (AFSL No. 519872).
For information relating to our financial services, you should refer to our Financial Services Guide.
Crystal Ball Finance content is designed as the opinion only and is general in nature. It does not take account of your objectives, financial situation or needs. Nothing in this content shall be construed as a solicitation to buy or sell any security or product or to engage in or refrain from engaging in any transaction. There are risks involved in any financial investment and trading strategy, and the value of any investment can and does fluctuate and may even become valueless. You should consider the appropriateness of any investment or trading strategy having regard to your circumstances. We recommend that you obtain financial, legal and taxation advice before making any financial investment decision or applying any trading strategy. This content is based on information obtained from sources believed to be reliable, but we do not make any representation or warranty that it is accurate, complete or up to date. We accept no obligation to correct or update the information or opinions in it. Opinions expressed are subject to change without notice. Crystal Ball Finance does not accept any liability whatsoever for any direct, indirect, consequential or other loss arising from any use or application of its content.