Chicago Gold futures price is up 1.13% at $1967.5 on early Monday trades.
Gold price continued its climb at the start of the week as the U.S. dollar weakened. Although it edged lower during the Asian session, it climbed in the early European session on Monday.
The equity market remains weak, with the Asian market ending lower on Monday due to uncertainties regarding the war in Ukraine, benefitting traditional safe-haven assets like Gold. However, the gains in gold prices are being capped by rising U.S. treasury yields.
The market participants are looking forward to critical data published this week: CPI data on Tuesday and ECB’s monetary policy on Thursday. If the ECB’s monetary policy turns hawkish rather than remaining unchanged, the EUR/USD will recover and weigh on the dollar. In this case, Gold will be able to edge higher. However, suppose the ECB’s policy remains cautious and focuses on the Russo-Ukraine war’s economic fallout instead of controlling the soaring inflation. In that case, EUR/USD could come under pressure making it difficult for Gold to gain traction.
The surging commodity prices, particularly energy and food prices, will push prices of essential goods higher, further compounding the high inflationary pressure. This situation will push Gold, typically used to hedge inflation, higher. Besides, expectations that the Fed would tighten its monetary policy faster could act as a headwind for the non-yield yellow metal.
On the technical front, the RSI of Chicago gold futures stood at 58.47 and is currently trading above SMAs: MA (5), MA (20), and MA (50). So, BUY position can be initiated with the following target and stoploss: