Gold prices (XAU/USD) edged higher on Friday, buoyed by strong economic data from China. However, hawkish comments from Federal Reserve officials capped further gains.
Reasons for the Rise:
- Strong China Data: China’s Industrial Production data exceeded expectations, indicating potential improvement in the world’s largest gold market.
- Lower Interest Rates Hope: Earlier expectations of imminent Fed rate cuts, fueled by weak US data, had supported gold prices.
Reasons for the Limited Gains:
- Fed Rejects Rate Cut Bets: Fed officials reiterated their stance on inflation not falling fast enough to warrant immediate rate cuts, dampening investor enthusiasm.
- Mixed US Data: Secondary US data releases on Thursday offered a mixed picture, providing no clear direction for gold prices.
Technical Analysis:
- Upward Channel: Gold remains within an upward channel on the short-term chart, suggesting a potential continuation of the bullish trend.
- Resistance Levels: A break above $2,400 could lead to further gains towards $2,417 (April 19th high) and $2,430 (all-time high).
- Relative Strength Index (RSI): The RSI is no longer in overbought territory, indicating room for renewed upward momentum.
Positive data from China boosted gold prices, but the Fed’s stance and mixed US data limited significant gains. The technical analysis suggests a potential upside for gold in the short term, but the direction will depend on future economic data and Fed pronouncements.
