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Gold under Pressure from the Likely Continuation of the Central Banks

2/28/2023 10:31 AM

The XAU/USD pair is slightly declining around 1814.46, returning to the "bearish" dynamics after an uncertain attempt to grow the day before. Gold has been losing value for the whole previous week, showing the biggest sell-off on Friday after the release of strong data on Personal Spending inflation, one of the key indicators in determining the US regulator's monetary policy. The growth of the instrument yesterday was more of a technical nature, while metal quotes are still under significant pressure against the background of the upcoming tightening of monetary stimulus by the US Federal Reserve, the European Central Bank (ECB) and the Bank of England.

At the moment, about 75% of analysts expect the US Fed to raise the interest rate by 25 basis points to 4.75-5.00% per annum, after which the regulator may probably try to bring the value above the psychological level of 5.00%. In turn, the European and British central banks can adjust the indicator by 50 basis points at once, trying to influence the dynamics of inflation.

On Wednesday, March 1, Germany will publish data on the Consumer Price Index. Inflation in Europe's largest economy is expected to remain at 8.7% YoY, but slow down slightly from 1.0% to 0.8% MoM. At the same time, the Harmonized CPI in February may be corrected from 9.2% to 9.6%. In general, the euro area is expected to reduce the Consumer Price Index from 8.6% to 8.2%.

Bollinger Bands on the daily chart show a steady decline. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD is trying to reverse upwards but preserves its previous sell signal (located below the signal line). Stochastic is showing similar dynamics, approaching its lows, indicating the risks of gold being oversold in the ultra-short term.

Resistance levels: 1828.22, 1850.27, 1869.49, 1886.46. | Support levels: 1800.00, 1786.28, 1765.66, 1753.09.

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