Gold Price Forecast: XAU/USD Hits $2,050 Low Ahead of FOMC Meeting

The gold (XAU/USD) price forecast appears somewhat subdued as the precious metal experiences a downturn for the third consecutive day, reaching over a one-week low of $2,050 during Monday’s Asian trading session.

This decline is attributed to the robust inflation figures emanating from the United States last week, which have fueled expectations that the Federal Reserve will maintain a stance of prolonged high-interest rates.

Consequently, this scenario has bolstered US Treasury bond yields, providing a boost to the US Dollar (USD) and placing pressure on non-yielding gold. Despite this, the market still anticipates a potential easing of rates by the Federal Reserve as early as June.

This expectation, combined with ongoing geopolitical tensions, is anticipated to provide a floor to gold’s value, preventing further significant losses.

Investors are likely to remain on the sidelines, awaiting additional indicators of the Fed’s interest rate trajectory, with attention particularly focused on the forthcoming two-day Federal Open Market Committee (FOMC) monetary policy meeting announcement on Wednesday.

US Inflation Data Impacts Gold Price Dynamics

Recent US data have highlighted persistent inflation, potentially compelling the Federal Reserve to sustain higher interest rates, which could adversely affect the appeal of gold.

Reports from the University of Michigan’s preliminary survey indicated minimal change in both one-year and five-year inflation expectations in March, while the US Consumer Sentiment Index dipped to 76.5.

The CME Group’s FedWatch Tool suggests a 60% probability of an interest rate reduction at the June policy meeting, tempering USD bullishness.

Geopolitical Uncertainties Support Safe-Haven Assets

The ongoing geopolitical discord, particularly the continued Russia-Ukraine conflict and unrest in the Middle East, is expected to underpin the value of gold as a safe-haven asset.

Recent escalations include intensified Ukrainian drone attacks on Russian oil facilities and Israeli Prime Minister Benjamin Netanyahu’s confirmation of plans to advance into Gaza’s Rafah region. These developments contribute to a climate of uncertainty, bolstering the gold case.

Anticipation Ahead of the FOMC Meeting

Investors are poised for the outcome of the FOMC’s monetary policy deliberations, with the market’s direction likely hinging on the forthcoming announcement.

As participants gauge the Fed’s stance on interest rates, the gold market remains in a state of watchful waiting, with the potential for shifts in investor sentiment based on the central bank’s decisions.

In summary, the gold price (XAU/USD) faces headwinds from a stronger USD and the prospect of sustained high US interest rates, yet geopolitical risks and market anticipation of Federal Reserve policy adjustments offer a measure of support.

The evolving landscape suggests a cautious approach among traders as they navigate through these uncertain times.

Gold Price Forecast: Descending Triangle Breakout

Gold’s (XAU/USD) price dipped to $2147.07, marking a 0.36% decrease, as it teeters below its pivotal $2157.22 pivot point. The asset’s breach of the descending triangle pattern close to the $2157 level highlights this movement as being bearish.

Immediate resistance lies ahead at $2173.06, with further obstacles at $2189.33 and $2204.58. Conversely, support levels are identified at $2139.00, $2124.63, and $2109.75, which could act as potential rebound zones.

Technical indicators, including a Relative Strength Index (RSI) at 36 and the 50-day Exponential Moving Average (EMA) positioned at $2150.84, align with a bearish outlook. The violation of the descending triangle pattern suggests imminent selling pressures, potentially driving the price towards the $2139.00 support level.

Overall, gold exhibits a bearish trend below the $2150 mark, with any upward movement past this threshold signalling a shift towards bullish momentum.