Zhang Yaoxi: The US dollar's strength, inflation concerns in Canada, and gold prices continue to maintain a volatile upward trend

Zhang Yaoxi: U.S. dollar strength driven by inflation concerns, gold prices remain volatile with an upward trend
On the previous trading day, Wednesday (March 11): International gold stayed cautious amid investor concerns over escalating Middle East conflicts. The U.S. dollar index initially fell then rose strongly, closing with a positive candle. Although February U.S. inflation stabilized as expected, soaring energy prices this month raised worries that March data will push inflation higher, leading to expectations of increased interest rates, which pressured gold prices to fluctuate and close lower. The rebound momentum weakened but remains above the midline and upward trend channel, indicating a bullish outlook for the future. Support levels are at the midline or the 30-day moving average, suggesting potential for bullish entry.
In terms of specific movement, gold opened in Asia at $5,190.52 per ounce, rebounded to a daily high of $5,222.61, then continued to fluctuate downward, reaching a daily low of $5,149.64 early in the U.S. session. It then recovered slightly but the bulls remained weak, with prices declining again toward the end of the session, ultimately closing at $5,175.94. The daily range was $72.97, down $14.58, a 0.28% decline.

Looking ahead to Thursday (March 12): International gold opened lower due to rising oil prices, heightened inflation concerns, and a strong dollar index at the open, which caused an initial decline. The early session saw a range similar to Wednesday but also touched support levels for a potential rebound, offering opportunities to buy on dips.
Today’s data focus includes U.S. initial jobless claims for the week ending March 7, January new housing starts (annualized), and January building permits. Market expectations are generally positive for gold, but January non-farm payrolls exceeded previous and expected figures, which could be bearish for gold. However, initial jobless claims may remain supportive. Therefore, the U.S. session may see sideways movement or a slight rebound, making dips suitable for bullish positions.
Additionally, the February core PCE price index, due on Friday, is expected to meet or slightly decline from expectations, given the recent positive non-farm data, increased manufacturing, and decreased retail sales. This could support a rate cut outlook and help gold rebound. From now through Thursday and Friday, trading strategies should focus on buying dips, with specific levels detailed in the technical analysis at the end.

Furthermore, historically, rising crude oil prices tend to lead gold either to sideways consolidation or continued strength, as both commodities often trend together. Although inflation concerns may temporarily reduce the Fed’s easing expectations, rising inflation will also boost gold’s commodity data prices, limiting downside pressure. Moreover, increased inflation prospects could lead to expectations of rate cuts in the future. When oil prices surge and then correct or decline, it’s often a good entry point for long positions in gold.
Additionally, the gold market does not face significant or sustained bearish factors. Last Friday’s unexpectedly strong non-farm employment data actually increased expectations for rate cuts. Even if inflation delays or prevents rate cuts, the market still anticipates a larger easing cycle after inflation subsides. China’s central bank has increased gold holdings for 16 consecutive months, and geopolitical risks continue to support gold prices.
If geopolitical tensions ease, inflation fears will diminish, boosting rate cut expectations and supporting bullish gold. Regardless of fundamental changes, short-term pressures exist, but the overall trend remains bullish. Gold prices could target $6,000 or higher within the year.

Technically, on the monthly chart, gold has shown weakness this month but remains above the 5-month moving average and the upward trendline broken in January. This suggests a continued bullish outlook. Even if the month ends with a sideways or slightly bearish pattern, the trend will likely stay above the trendline, with potential for further gains afterward.
If prices break below the trendline support and close below $4,300, it could signal the end of the bull market, with further declines toward $3,500 or even lower. Currently, this scenario seems unlikely.
On the daily chart, gold shows some weakness, testing the midline support early in the session. While the recent trend has been sideways upward, the MACD indicator shows signs of divergence, indicating a risk of falling below support levels of $5,050 or even $4,930. However, after reaching support, there are opportunities to buy, especially if prices approach the midline, the 30-day or 60-day moving averages, or break above $5,200 and stabilize. Watching for a rebound is advised.

Gold: Support levels at around $5,125 or $5,085; resistance at approximately $5,185 or $5,200.
Silver: Support at about $84.00 or $82.50; resistance at roughly $86.80 or $88.40.
Note:
Gold TD = (International gold price × exchange rate) / 31.1035
A $1 fluctuation in international gold prices roughly causes a $0.25 change in Gold TD (theoretically).
U.S. futures gold price = London spot price × (1 + gold swap rate × days to expiry / 365)
Follow me to clarify your gold trading ideas!
Reviewing historical cause and effect, interpreting current environments, and projecting future trends, I adhere to bold predictions and cautious trading principles. – Zhang Yaoxi
The above opinions and analysis are solely personal views of the author, for reference only, not trading advice. Trade at your own risk.
You decide your own money.