Gold Retreat after Breaking New High

• Powell Delivered hawkish statements at the testimony that could spur the dollar's strength.

• Today's U.S. CPI is expected to have a strong reading that may help to bolster the dollar's strength.

• Oil prices rose sharply this week as the U.S. sanctions on Russian and Iranian oil spark concern on oil supply.

Market Summary

The market‘s attention remained squarely on Federal Reserve Chair Jerome Powell’s semi-annual testimony before the Senate, where he reiterated that the Fed has already cut interest rates by 100 basis points from their peak. Powell emphasized that while the U.S. economy remains resilient, persistent inflationary pressures justify a patient approach to further rate cuts. His hawkish tone bolstered the dollar, with the Dollar Index (DXY) reclaiming ground above the 108.00 mark, reversing its prior bearish trend.

Equities struggled under Powell‘s cautious outlook, with all three major U.S. indices trading flat for the week as investors digested the Fed’s stance. Market participants now turn their focus to today‘s U.S. Consumer Price Index (CPI) release and the second day of Powell’s testimony for further insights into the Fed‘s monetary policy trajectory and the dollar’s price action.

In commodities, gold briefly surged past $2,900 for the first time, driven by strong safe-haven demand, before succumbing to profit-taking, which dragged prices back below the key psychological level. The metal is expected to hover around $2,880 as traders await a fresh catalyst to extend the rally.

Meanwhile, oil prices rebounded sharply, gaining over 3% from recent lows. The surge came as the U.S. intensified sanctions on Russian and Iranian oil, targeting shipments in an effort to maximize pressure on both countries' exports. Additionally, escalating tensions in the Middle East, exacerbated by disputes over hostage negotiations, further fueled supply concerns and lifted crude prices.

Current rate hike bets on 19th March Fed interest rate decision:

Source: CME Fedwatch Tool

0 bps (91.50%) VS -25 bps (8.5%)

Market Movements

DOLLAR_INDX, H4

Federal Reserve Chair Jerome Powell reiterated that the Fed is in no hurry to cut interest rates, emphasizing a patient approach before lowering borrowing costs. Following his testimony, Treasury yields remained elevated, while stocks fluctuated. Market participants largely maintained their expectations, with a first rate cut not fully priced until September and fewer than two cuts projected for 2025. Given the lack of surprises, the U.S. dollar remained flat, testing key support levels.

The Dollar Index is trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 45, suggesting the index might extend its losses since the RSI stays below the midline.

Resistance level: 108.35, 109.90

Support level: 107.35, 106.50

XAU/USD, H4

Gold prices retreated due to profit-taking and technical corrections after hitting record highs. Rising U.S. Treasury yields also pressured bullion, as Powells comments suggested the Fed may keep rates elevated for longer. However, the long-term outlook for gold remains resilient, especially amid ongoing trade war uncertainties. Investors are now shifting focus to the U.S. Consumer Price Index (CPI) inflation report, which could trigger significant volatility in gold and the dollar.

Gold prices are trading lower while currently testing the support level. MACD has illustrated increasing bearish momentum, while RSI is at 56, suggesting the commodity might extend its losses after breakout since the RSI retreated sharply from overbought territory.

Resistance level: 2960.00, 3000.00

Support level: 2875.00, 2755.00

Crude Oil, H4

Crude oil prices surged to a two-week high, driven by U.S. sanctions on Russian and Iranian oil supplies and escalating Middle East tensions. U.S. measures targeting oil tankers, producers, and insurers have disrupted Russian oil shipments to China and India, while fresh sanctions on Iranian exports have further tightened supply. Despite concerns that trade tariffs could dampen global growth and fuel inflation, supply-side risks continued to support crude prices.

Crude oil prices are trading lower while currently testing the support level. MACD has illustrated diminishing bullish momentum, while RSI is at 62, suggesting the commodity might extend its losses after breakout since the RSI retreated from overbought territory.

Resistance level: 74.30 75.45

Support level: 72.85, 70.55