Rate Pause Doubts Boost Gold? A Technical and Economic Overview

Gold trades flat despite the weak US dollar. It hit a high of  $2929 yesterday and is currently trading around $2900.

Employment and Services Sector Overview

The February 2025 ADP Employment Report reported that private sector job growth slowed dramatically, increasing only by 77,000 jobs, the smallest gain since July 2024. The goods-producing industries showed increases in construction and manufacturing, but service-providing industries had mixed results with large gains in leisure and hospitality offset by declines in trade, transportation, utilities, education, and health services. Job growth was driven by larger companies, and geographically, the Northeast and Midwest were growing jobs while the South and West shed jobs.

The unexpected jump in the ISM Services PMI to 53.5 in February, after 52.8 in January, suggests revival in the service sector despite the decline in January. The decline in January was due to business activity and new orders having slowed down. Despite such issues and factors like weather and tariffs, the services sector remains in expansionary territory, demonstrating strength.

Rate Pause Hopes to Fade

According to the CME Fed Watch tool, the chances of a rate pause in the Mar 19th, 2025 meeting have decreased to 93% up from 96% a week ago.

Technical Analysis: Key Levels and Trading Strategy

Gold prices are holding above short-term moving averages 34 EMA and 55 EMA and above long-term moving averages (200 EMA) in the 4-hour chart. Immediate support is at $2895 and a break below this level will drag the yellow metal to $2867/$2850/$2830/$2800/$2770/$2740. The near-term resistance is at $2930, with potential price targets at $2940/$2957/$3000.

It is good to buy on dips around $2880 with a stop-loss at $2850 for a target price of $3000.