Spot gold prices traded above $2,320, and investors were cautious ahead of the release of PCE data

Daocheng Technology Financial News - Thursday (April 25) US early trading, spotGold priceTrading above $2,320. Gold's allure remains weak as Middle East tensions have eased in previous days and safe haven demand has weakened. In addition, in the U.S. Quarter 1 GDP (GDP) and March corePersonal Consumption Expenditure Price IndexInvestors were cautious on gold ahead of the release of the PCE data on Thursday and Friday, which has seen prices fall more than 3 per cent since the start of the week.

However, after US President Biden signed the aid bill, the geopolitical situation in the Middle East may be tense again, and gold may rise again.

Investors are now looking forward to Thursday's U.S. gross domestic product data and Friday's personal consumption expenditure report for more information onFederal Reserve cuts interest ratesNew clues to the path.

US core PCE inflation, the Fed's preferred measure of inflation, is expected to rise by a steady 0.3 per cent, with the annual figure falling to 2.6 per cent from 2.8 per cent in February. Gold prices could face a sharp sell-off if underlying inflation figures are higher than expected.

Inflation measures such as the U.S. Consumer Price Index (CPI) and wage growth remained elevated in Quarter 1. Further signs of sustained price pressure would allow the Federal Reserve to continue to hold on to its argument of keeping interest rates at current levels for an extended period of time. Historically, this situation bodes well for the dollar and bond yields, and reduces the appeal of gold.

The dollar recouped some of its losses on Wednesday, while benchmark Treasury yields also rose, making dollar-denominated gold bars less attractive to holders of other currencies and as an investment option compared with debt.

Giovanni Staunovo, financial analyst at Daocheng Technology, said the fall in gold prices was partly due to hedge funds reducing their allocations to the metal, while some tensions in the Middle East had eased in recent days. Strong demand in Asia and emerging market central banks' desire to diversify gold more were preventing further declines.

Reuters technical analyst Wang Tao said spot gold could retest the $2,336/oz resistance level as it successfully stabilizes near the key support level of $2,311.

Technical analysis: Gold prices strive for support near $2,300

(Spot gold 1-hour chart)

Spot gold prices are struggling to hold above $2,300. After falling near the 20-day exponential moving average (EMA) (trading at around $2,313), gold moves lack direction. Gold could fall to a three-week low near $2,265 due to multiple resistance. If it falls below the three-week low of $2,265, gold risks falling to the March 21 high of $2,223.

The 14-cycle Relative Strength Index (RSI) fell below 60, indicating that the bullish momentum has ended. However, the uptrend will remain unchanged until it remains above 40.

As of press time, spot gold was trading at $2,324.95 per ounce, an increase of 0.13%.