Gold prices faced a downward trend on Tuesday following a strong U.S. inflation report for February. The report showed that the consumer price index (CPI) rose 0.4% from January and 3.2% from the same period last year, exceeding expectations. Core CPI, which excludes food and energy costs, also increased by 0.4% month-on-month and 3.8% year-on-year, indicating stubborn inflation levels. This data led to profit-taking trading in the gold market, with spot gold prices dropping 1.4% to $2,153.05 an ounce after hitting a record high of $2,194.99.
Federal Reserve Chairman Jerome Powell had previously hinted at the possibility of interest rate cuts, but strong inflation data has put a damper on those expectations. The market is now closely watching the Fed’s upcoming meeting for further guidance on interest rate policies. The technical analysis suggests a potential for a substantial correction in gold prices if the market forms a dead cross pattern.
Overall, the Federal Reserve’s monetary policy remains a key factor influencing the gold market. The market is still uncertain about the timing and number of interest rate cuts this year, which will continue to impact gold prices in the near future. Investors are advised to closely monitor the support levels and technical indicators for any potential market shifts.