Gold Price Forecast: $2159 Ahead of Fed Meeting, Inflation Pressures Loom; Buy Now?
As of March 20, Gold's trading session closed at $2159.01, marking a slight increase of 0.05%. As the market braces for the Federal Reserve
As of March 20, Gold’s trading session closed at $2159.01, marking a slight increase of 0.05%. As the market braces for the Federal Reserve’s upcoming monetary policy announcement, the Gold price forecast (XAU/USD) is caught in a tight spot, trading sideways during Wednesday’s Asian session.
With the Federal Reserve expected to uphold its higher-for-longer interest rate policy amidst stubborn inflation, the US Dollar has ascended to a two-week zenith, escalating to 103.50, which naturally puts pressure on Gold.
Geopolitical Tensions Offer a Buffer
The bleak outlook for Gold, however, finds some respite amidst the lingering geopolitical discord, most notably the protracted Russia-Ukraine conflict and unrest in the Middle East.
These factors have somewhat cushioned Gold’s fall, limiting its downside as investors seek safe havens.
Yet, the market’s gaze is fixed on the Federal Reserve’s guidance on potential rate cuts, with the upcoming economic projections and Fed Chair Jerome Powell’s commentary poised to be pivotal for Gold’s next directional move.
Inflation Data and Treasury Yields: A Double-Edged Sword
The narrative of Gold’s price dynamics is further complicated by recent US inflation figures, which exceeded expectations at 3.6% year-over-year, compelling investors to scale back their predictions for an interest rate cut in June.
This recalibration has reinforced US Treasury yields, particularly the 10-year note, which surged to a peak of 3.5%, its highest since November 30, thereby bolstering the US Dollar and limiting Gold’s upside potential.
Equity Market Rally and the FOMC Meeting Outcome Awaited
With Wall Street experiencing a buoyant phase — the S&P 500 climbed to a record high, closing up by 1.3% — investors are showing hesitance towards Gold.
The focus is now squarely on the FOMC meeting’s outcome, especially the “dot plot,” for insights into the Federal Reserve’s interest rate landscape for 2024, which could significantly influence Gold prices.
Upcoming Key Financial Events Include:
- Federal Funds Rate: Anticipated to hold steady at 5.50%.
- FOMC Economic Projections: Key for understanding the Fed’s rate path.
- FOMC Statement and Press Conference: Critical for market sentiment and Gold’s price direction.
Gold Price Forecast: Technical Outlook
The current pivot point is set at $2153.10, serving as a crucial juncture for future price movements. Key resistance levels for Gold are identified at $2163.05, $2168.99, and $2176.48, each potentially capping upward trends.
Conversely, support levels are firmly established at $2146.52, $2139.00, and $2131.14, offering floors that may halt declines.
Technical indicators provide additional insights into Gold’s trajectory. The Relative Strength Index (RSI) stands at 49, indicating a neutral market sentiment.
Meanwhile, the 50-Day Exponential Moving Average (EMA), positioned at $2153.45, suggests that the $2153 level is a critical support area. Notably, Gold faces resistance near the $2160 mark, influenced by a downward trendline.
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