Higher Volatility Expected for NASDAQ During PCE Price Index Release

Stocks drop to a new monthly low as the economy faces low growth and more monetary pressure. On the other hand, the price of Gold continues to move within February’s previously formed trend. The US released its latest Quarterly Gross Domestic Product figure yesterday, triggering increased volatility. The GDP figure showed 2.7%, lower than the expected 2.9% but still higher than the last 2 quarters. The figure also confirms the US is not in a recession. 

However, the economic growth is still lower than previously thought, but the Federal Reserve is still likely to stick to its hawkish stance. The issue for the stock market is that companies are now under pressure from poor growth and high-interest rates. Today’s investors will fix their eyes on the Core PCE Price Index, which the Fed closely watches. The PCE Price Index is expected to rise from 0.3% to 0.4%. This would take the index to its highest point since October. Most economists believe a figure of 0.4% above will further support more rate hikes. 

XAU/USD 

Gold's price remains under pressure from a strengthening US Dollar, higher interest rates, and high bond yields. This week's price has declined for 3 consecutive days and this morning. This month's price has declined by 5.5% and has fully corrected the bullish price movement experienced in January 2023.

The price has now reached a resistance level which may now be converted to a support level. This would follow the traditional Elliot wave-style trend. However, the price is yet to obtain any indications of a loss of momentum from divergence or price action. Most indications continue to point towards sellers maintaining control. Moving Averages and the MACD are crossed downwards, and the price is below 50.00 on oscillators. This indicates a further downward trend, but investors will be cautious that the price is close to a previous resistance level from February 17th. 

XAU/USD 8-Hour Chart on February 24th 

According to analysts, there is a 30-35% chance of the Federal Reserve increasing interest rates by 50 basis points. A larger interest rate hike can significantly pressure the price of Gold. However, even if the Federal Reserve does not increase by 50 basis points, the Fed’s rate will likely continue rising beyond March. Higher interest rates increase the return on Dollar investments, and Bond yields have also recently increased. The Dollar, Bonds, and Gold are the top three haven assets, but the pressure is mounting on Gold as the return on the other two assets increase. 

The US Commodity Futures Trading Commission will release its latest report on how investors speculate on Gold this afternoon. The latest reports have all confirmed investors are expecting the price of Gold to decline. However, traders question whether the price can continue to break through support levels after a month of declines. 

NASDAQ

The NASDAQ was again the best-performing index during yesterday’s US trading session. The Asset was the only US index that did not decline to a lower price and ended the day significantly higher than other indices. The NASDAQ increased by 0.90% during the US session, the SNP500 by 0.50, and the Dow Jones by 0.30%. However, the SNP500 and DowJones did experience significant declines at some point. 

NASDAQ 4-Hour Chart on February 24th 

The price of the NASDAQ is declining this morning by 0.32% and is still within a downward trend pattern. Despite yesterday's bullish price movement, the asset still forms lower lows and lower highs on the larger timeframes. The price trades below the 150-day Exponential Moving Average, and the stochastic oscillator is also crossed over downwards. Both indicators point towards further price pressure. 

The price will also experience higher volatility this afternoon during the release of the PCE Price Index. If the figure is lower than expected, the NASDAQ may positively react. However, a higher figure will certainly increase speculation of the Fed’s terminal rate increasing closer to 5.75-6.00%.

Summary:

• Indices reach a new monthly low except for the NASDAQ. The NASDAQ was the best-performing index of the day but is again declining this morning. 
• The US saw its GDP figure grow at a slower pace than previously expected. The GDP figure read 2.7% instead of 2.9%.
• Traders turn their attention to this afternoon’s PCE Price Index. A higher PCE Price Index will further support stronger interest rate hikes
• Gold comes under pressure from a more expensive US Dollar, higher interest rates, and higher bond yields.