During the European session on Thursday (April 25), due to the weakening US dollar, the price of gold rose slightly today. Market participants actively await key US economic data that may affect the Fed's interest rate decision. The dollar index fell by around 0.2%, making dollar-denominated gold more attractive to international buyers.

Expected economic data

Investors are watching for several key economic indicators scheduled to be released this week. Economists surveyed by Dow Jones expect the US gross domestic product (GDP) to grow by 2.4% in the first quarter. In addition, the number of people applying for unemployment benefits for the first time each week and the personal consumption expenditure (PCE) price index will also be published. This index is the inflation index favored by the Federal Reserve. These data could be significant in influencing the upcoming policy decisions of the Federal Reserve.

Market sentiment and expectations

Although the market does not expect the Federal Reserve to adjust interest rates at its next meeting, investors are watching for hints that interest rates may be cut later this year. Market sentiment tracked by the Chicago Mercantile Exchange Group (CME Group)'s FedWatch tool shows that the Federal Reserve may cut interest rates by September, which largely depends on the trend of upcoming economic data. Furthermore, due to the settlement of profits and the easing of tension in the Middle East, the price of gold has recovered sharply, falling more than $100 from a high of $2431.29 on April 12.

Gold short-term outlook

The short-term trend of gold prices will largely depend on upcoming US economic data. If the core personal consumption expenditure index meets or falls short of expectations, the US dollar may weaken further, which may push up the price of gold. On the other hand, if the inflation data is higher than expected, gold may face downward pressure, as this may cause the Federal Reserve to adopt a more aggressive interest rate stance.

In summary, the gold market is showing cautious optimism, boosted by the weakening dollar and strategic purchases in the Asian region. However, upcoming US economic data and the Federal Reserve's policy decisions are key factors that could influence market sentiment. Traders are preparing for a possible rise in gold prices, depending on favorable economic reports and stable interest rate forecasts.

Technical analysis

(Spot Gold Daily Map Source: Easy Huitong)

The short-term trend is declining, but gold is still well supported by medium- to long-term trends.

The short-term fluctuation range for spot gold is between $2,146.15 and $2431.59. The 50% Fibonacci retracement level of $2288.87 is the first downside target. Earlier this week, the market tested $2291.46. If this level does not act as support, the sell-off could extend to the 50-day moving average of $2198.94.

The smaller price fluctuation range was between $2431.59 and $2291.46. The 50% Fibonacci retracement level of $2361.52 is a potential upward target. The trader's reaction to this level test will determine whether the buying is strong enough to challenge the all-time high or whether selling pressure will resume.

At 19:51 Beijing time, spot gold was reported at 2329.16 US dollars/ounce, an increase of 0.58%.