GOLD Prices Rebound Amidst Dollar Weakness: Trading Opportunity

Gold prices surged to nearly $2,176 per troy ounce during the EU session, recovering losses from the past two trading sessions. The uptick in gold prices can be attributed to a weakening US Dollar (USD), influenced by the dovish sentiment surrounding the Federal Reserve's stance on interest rate trajectory.

Traders are eyeing the opportunity to set two limit orders in a higher supply area, anticipating a potential reversal and deeper retracement in price.

Recent indications from Fed policymakers suggest their continued intention to reduce interest rates by three-quarters of a percentage point by the end of 2024, despite recent high inflation readings. This has further bolstered gold prices.

However, the decline in US yields signals a shift in investor sentiment towards US Treasury bonds, potentially posing a challenge for non-yielding assets like gold. With the 2-year and 10-year yields on US Treasury bonds holding steady at 4.60% and 4.21%, respectively, investors may find bonds more attractive in terms of safety and stability compared to gold.

The upcoming US inflation readings, including the release of Gross Domestic Product (GDP) data for the fourth quarter of 2023 and the Personal Consumption Expenditures (PCE) price index report, are expected to significantly impact gold prices. These indicators will provide insights into inflationary pressures, influencing gold prices accordingly.

Traders are poised to capitalize on potential price reversals, leveraging the current market conditions.

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