Hawkish Fed Bets Take Center Stage: What Does It Mean for the Gold Price Forecast?
The gold price becomes risky at over $1,810.00 due to increased bets for higher rates by the Federal Reserve (Fed).
The GOLD price becomes risky at over $1,810.00 due to increased bets for higher rates by the Federal Reserve (Fed). Following solid US employment statistics from Automatic Data Processing (ADP), which showed that January’s strong consumer spending and increased payrolls were not an anomaly in the general downward trend of the CPI (Consumer Price Index), GOLD prices are expected to fall again.
During Wednesday’s Asian trading session, futures for the S&P 500 gave up their small gains, and risk-aversion concepts gained momentum due to deflationary signs in China’s CPI and PPI. As investors await the release of fresh clues from the US Nonfarm Payrolls (NFP) statistics, the US Dollar Index (DXY) has remained rangebound above 105.20. However, the yield premium on 10-year US Treasury notes has risen to almost 3.98%.
According to predictions, payrolls will decrease from the previous release of 514k to 203k in the official US Employment report. Although not as dismal as 203k, it is still significantly lower than January’s figure. It’s important to note that the 514k figure is unusual for the last seven months, and investors should consider that when analyzing the data.
Experts predict that the unemployment rate will remain at a record low of 3.4%, and the yearly increase in average hourly earnings is expected to reach 4.8%. This could result in people having more money to spend, which could lead to increased shopping activity. Federal Reserve Chair Jerome Powell has already committed to raising interest rates to combat inflation.
Gold Technical Outlook
The GOLD price experienced an apparent decline yesterday, breaking below the key level of $1,828.70 and closing below it. This has put the price back under corrective downward pressure, with a possible target of $1,788.20. The bearish wave is organized by a bearish channel that is supported by the EMA50, pressuring the price downward.
While stochastic current positivity may slow down the bearish wave, the overall bias for today is expected to be bearish unless the price manages to rally and breach the levels of $1,828.70 and $1,848.00 and hold above them.
The desired trading range for today is between the support level of $1,790.00 and the resistance level of $1,825.00.
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