Gold Price Prediction: Ascending Triangle Pattern, FOMC & Fund Fund Rate Ahead

Good morning, traders.

The precious metal GOLD prices jumped and reached the 13-day highest level on the back of the latest policy decision from the US Federal Reserve. The Central Bank of the US sharply raised its expectations for economic growth this year amid the rising vaccination rate and government relief funds’ flow into the economy.

The forecast for the average growth rate for this year in the March meeting by Federal Reserve was raised to 6.5% from the previous forecast of 4.2% in December 2020. Despite an improved outlook for the economy and a shift to higher inflation this year, the Federal Reserve indicated no plans to raise interest rates through 2023. Fed also said that the outlook for recovery in the jobs sector has also brightened. The Federal Reserve also boosted its forecast for inflation to 2.4% this year from the previous expectations of 1.8%. If this forecast comes true, the inflation level would finally surpass the target level of 2% after years of ultra-low inflation. However, the Fed has also predicted the inflation to fall back to 2% in 2022 and 2.1% in 2023.

To keep the longer-term borrowing costs lower, the central bank also said that it would continue to buy $120 billion in bonds each month. For the jobs market, the Fed has forecast that the country’s unemployment rate will drop to 4.5% by the year-end from the current level of 6.2%. After the FOMC statement release, Fed Chair Jerome Powell eased the markets and pushed back against the speculations that the central bank could start to wind down its easing policies. Powell repeated that Fed would not increase its interest rates or move from its bond purchases anytime soon.

Powel’s comments defused traders’ concerns that the Fed might unwind some of its easing programs soon and lifted the prices in the market. Gold prices also surged after the Fed’s announcement and reached their 13-day highest level on Wednesday.

On the data front, at 17:30 GMT, the Building Permits from February fell to 1.68M against the estimated 1.74M and weighed on the US dollar that ultimately lifted the yellow metal prices. In February, the Housing Starts also fell to 1.42M against the anticipated 1.56M and weighed on the US dollar and favored the gold prices on Wednesday.