OUTLOOK: Price Signal Summary - Gold Bulls Remain In The Driver's Seat

• RES 4: 111-22+ High Dec 3 ‘24 and a key resistance
• RES 3: 111-00   Round number resistance  
• RES 2: 110-31   1.00proj of the Jan 13 - Feb 7 - Feb 12 price swing     
• RES 1: 110-21   High Feb 25
• PRICE:‌‌ 110-11 @ 11:21 GMT Feb 26
• SUP 1: 110-00   High Feb 7 and a recent breakout point        
• SUP 2: 109-11   50-day EMA and a key near-term support 
• SUP 3: 108-21   Low Feb 19 
• SUP 4: 108-03+ Low Dec 12 and a bear trigger  

Treasury futures have traded higher this week. The contract has pierced resistance at 110-20, the 76.4% retracement of the Dec 3 - Jan 13 bear leg. 
This broadens the bullish recovery and signals scope for a climb towards the 111-00 handle, ahead of 111-22+, the Dec 3 high and a key resistance. Initial firm support to monitor is 109-11, the 50-day EMA. A move below this average is required to highlight a potential reversal.

• Despite a more stable tone for major equity benchmarks on Wednesday, AUD and NZD weakness is standing out, with both currencies roughly half a percent weaker on the session against the dollar. A moderate uptick for US yields might be assisting the greenback, with some analysts pointing to the softer Australian data overnight providing an additional AUD headwind.
• January headline CPI inflation printed slightly lower than expected at 2.5% y/y, in line with December. However, the underlying trimmed mean rose 0.1pp to 2.8%, but still below the top of the RBA’s 2-3% band. As a reminder, the first month of the quarter has limited updates for services inflation.
• Another possible contributor - Australia is planning to review the fallout on Southeast Asia and the Pacific of President Donald Trump’s planned cuts to USAID. The government’s latest foreign policy assessment warned of an “increasingly unpredictable” global strategic outlook, potentially limiting the optimism for higher beta currencies at this juncture.
• For AUDUSD, 0.6400 has proved a significant pivot on a closing basis over the last 10 months, and latest weakness extends the pullback from last week’s high (0.6409) to around 1.5%. Spot is currently testing 50-day EMA support, crossing at 0.6316 and further weakness would refocus attention on 0.6231, the Feb 10 low.

• House Republicans narrowly passing a budget blueprint, enabling potential extension of Trump's 2017 tax cuts with $4.5t in tax reductions and a $4t debt limit increase, has seen Fed Funds implied rates pare the latest decline seen yesterday on soft Conference Board consumer confidence.
• Trump’s latest tariff threat, this time focused on copper, had little immediate impact but could also be factoring at the margin behind the overnight uplift.
• Rates are still towards dovish extremes despite the overnight push higher, with 54bp of cuts for 2025 off Tuesday’s high of 60bp but still close to the most cuts priced since the hawkish FOMC on Dec 18.
• Cumulative cuts from 4.33% effective: 0.5bp Mar, 6.5bp May, 19bp Jun, 27.5bp Jul and 54bp Dec.
• The median FOMC member envisaged 50bp of cuts for 2025 back in the December SEP.
• Today’s scheduled Fedspeak shouldn’t have much impact, with Barkin and Bostic both having spoken recently.
  • 0830ET – Barkin (non-voter) repeats a speech on inflation (text). He said yesterday that he favors “modestly restrictive” monetary policy as he’s waiting for more confidence that inflation is returning to 2%. Long-run economic trends point to inflation headwinds and Fed policy may need to “lean against” those headwinds.
  • 1200ET – Bostic (non-voter) speaks on the economic outlook and housing (Q&A only). He said Feb 20 that he still sees two cuts in 2025 as his base case but uncertainty around this projection has increased. He thinks policy is “moderately restrictive” with neutral “somewhere from 3% and 3.5%.”