Gold Price Gains Amid Fed Rate Cut Prospects and Geopolitical Tensions
During the Asian session on Thursday, GOLD prices exhibited a bullish trend, trading around a three-week high near $2,088 per troy ounce. The Federal Reserve’s (Fed) potential rate cuts in early 2024 have fueled investors’ growing risk appetite, which is largely to blame for this upward momentum. Such anticipatory adjustments in monetary policy are enhancing the appeal of the yellow metal in the market.
Geopolitical Factors and Chinese Economic Policies Influence Gold Market
The recent resumption of major shipping activities in the Red Sea hints at a tentative normalization, possibly driven by the presence of a multinational task force. However, ongoing geopolitical tensions, including the threat of Iran closing the Gibraltar Strait, continue to stir market uncertainty.
This complex geopolitical landscape in the Middle East is fostering a heightened demand for safe-haven assets like Gold.Further impacting gold’s price trajectory is China’s economic strategy. The National Development and Reform Commission (NDRC) Chairman, Zheng Shanjie, affirmed China’s commitment to stimulate domestic demand and foster economic recovery. Positive shifts in the Chinese economy could contribute to further gains in Gold prices.
Market Anticipation of Fed Policy Decisions Boosts Gold’s Appeal
The market is currently factoring in over an 88% likelihood of a Fed rate cut in March, with full anticipation of a cut by May, as per the CME Fedwatch tool. The US’s lower Core PCE inflation figures support this opinion and raise the possibility that the Fed will relax its stance on monetary policy in response to the state of the economy.
Investors are likely to closely monitor upcoming US economic data releases, such as Initial Jobless Claims and Pending Home Sales, for further market direction.
Gold’s Bullish Technical Outlook
Gold’s price has opened with renewed positivity, re-entering its primary bullish channel. This trend indicates a potential for further gains, starting at $2,100.00 and possibly extending to the recent high of $2,144.60.
A completed double bottom pattern supports the bullish wave, increasing the likelihood of continued ascension shortly. To maintain this bullish outlook, gold prices must avoid breaking below the critical support level of $2,065.70.
Today’s expected trading range is between $2,075.00 support and $2,105.00 resistance, with the trend predominantly bullish.
Gold Live Chart
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