Gold price (XAU/USD) experiences a sharp decline following the release of hotter-than-expected US Producer Price Index (PPI) data for February. Sticky inflation strengthens the US Dollar (USD) and boosts bond yields, increasing the opportunity cost of holding non-yielding Gold.
Key Factors:
- US PPI Data: Unexpectedly high inflation figures deepen uncertainty over potential Fed rate cuts in June.
- Rising Yields: 10-year US Treasury bond yields climb, weighing on Gold.
- Strengthening USD: The US Dollar Index gains, further pressuring Gold.
- Focus on Fed: Markets await the upcoming Fed interest rate decision and revised projections (dot plot) for key insights into the rate outlook.
Technical Outlook:
- Consolidating: Gold price oscillates within Tuesday’s trading range, indicating possible near-term volatility contraction.
- Support Levels: December 4 high ($2,145) and December 28 high ($2,088) offer potential support.
- RSI Retreat: While still indicating upside momentum, the Relative Strength Index (RSI) has pulled back from its peak.
