Weekly Outlook on Gold - 10 Mar 2023

Gold prices kept to a small range on Friday as weekly jobless claims grew more than expected, spurring hopes that a softening labor market could pave the way for less-aggressive rate hikes from Federal Reserve. Data on Thursday showed the number of Americans filing new claims for unemployment benefits last week increased by the most in five months. 

The dollar fell from recent highs, while Treasury yields also retreated. But gold was still down about 1% for the week, after Fed Chair Jerome Powell warned that U.S. interest rates are likely to rise beyond market expectations, given recent strength in inflation and the jobs market. Powell noted that future rate hikes will be largely determined by incoming economic readings. U.S. inflation data for February is due next week, ahead of the Fed’s policy meeting on March 22.
 

COMEX Gold prices moved up from the support of 100-weeks Moving Averages and Horizontal line support. However, the prices are still trading below the $1870 mark. A momentum indicator, Stochastic RSI, is in oversold territory, which suggests a pullback in the counter. On the daily chart, the price has taken Trendline support and RSI witnessed a positive crossover. The gold has immediate support at $1800 & $1770 while resistance is around $1865 & 1880 levels.

MCX Gold prices showed some recovery after the U.S. data but are still trading below the prior week close and 50 DEMA. However, a momentum indicator, RSI, witnessed a positive crossover with rising volume activity that shows further up move in the near term. On the downside, gold has support around 55000/54700 levels, while on the upside, the price may find resistance around 56000/56300 levels.

Hence, traders are advised to trade cautiously with the proper stop loss and keep an eye on nonfarm payrolls data, Fed action on interest rate hike and Dollar index momentum. One can look for a buy on dips strategy for the coming weeks.

Important Key Levels: