Gold prices experienced a volatile session with a downward bias on March 12th. After opening higher in the Asian session and reaching above $5170, the metal traded sideways around $5150 for most of the day. A significant sell-off began during the US trading hours, with prices breaking through several support levels to hit a low of $5053 before closing at $5078, marking a second consecutive day of losses.
On Friday, March 13th, typically strong bullish drivers for gold—such as escalating Middle East conflicts, the blockade crisis in the Strait of Hormuz, and oil prices hitting a near four-year high—are being counteracted by a strong US Dollar, delayed expectations for interest rate cuts, and technical selling pressure. The release of the US Core PCE Price Index for January, the Federal Reserve's preferred inflation gauge, scheduled for later today, could act as a catalyst to break the current market deadlock.
It can be argued that safe-haven demand continues to flow into gold but is being temporarily suppressed by more dominant macroeconomic factors. The volatile situation regarding navigation through the Strait of Hormuz has left market sentiment highly sensitive. Should tonight's PCE data fall below expectations, it would reinforce the view that inflation is under control, boost expectations for rate cuts, and potentially drive gold prices back above $5150. Conversely, data exceeding forecasts could reignite fears of further rate hikes, possibly triggering a sharp decline in gold towards or below the $5000 psychological level.
From a technical perspective, after a rebound tested resistance in the $5180-90 zone yesterday, gold faced selling pressure and subsequently released downward momentum during the late session, dropping directly to around $5055. Although a minor rebound has occurred, a short-term downtrend is evident on the hourly chart. Immediate resistance is now seen in the $5125-30 area, followed by the trendline resistance near $5160. Technically, the market may exhibit weak, range-bound behavior today. Whether the decline extends further will likely depend on fundamental catalysts that could be interpreted as "not bullish, therefore bearish." Initial support on the hourly chart is around the $5060-50 trendline; a break below this level would open the path towards a test of the key $5000 support.
In summary, today is a typical "data risk day," with the PCE release having the potential to cause significant market volatility. The current environment presents considerable operational challenges. Investors are advised to adopt a cautious approach, prioritizing observation over action, and wait for the data release and subsequent technical stabilization before establishing new positions. Given the stark conflict between bullish and bearish forces, aggressive chasing of price moves is discouraged. All trades should be executed with strict stop-loss and take-profit orders.
Intraday trading strategy suggestion: Gold: Operate within the $5050-$5180 range. Set a stop-loss of $10 and a target profit of $80-$100.
Key economic data and events to watch today, Friday, March 13th: 20:30 US Core PCE Price Index (YoY) for January 20:30 US Personal Spending (MoM) for January 20:30 US Real GDP Annualized QoQ (Q4 Second Estimate) 20:30 US Core PCE Price Index (MoM) for January 20:30 US Durable Goods Orders (MoM) for January 22:00 US JOLTs Job Openings for January 22:00 US 1-Year Inflation Expectations (Preliminary) for March 22:00 US Michigan Consumer Sentiment Index (Preliminary) for March
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