Gold Price Forecast: Drops to $2,173 Amid Fed Policy Update; Is It Time to Go Long?
On March 22, Gold (XAU/USD) experienced a minor setback, with its value decreasing by 0.34% to settle at $2,173.88.
This decline followed a robust recovery in the US Dollar (USD) after the Federal Reserve’s policy update, which highlighted renewed optimism regarding the United States’ economic prospects. The recovery was further fueled by a surge in US Treasury bond yields and a prevailing risk-on mood, exerting downward pressure on Gold, traditionally regarded as a safe haven during turbulent times.
Despite these downward trends, Gold’s price found some support from the Federal Reserve’s dovish policy outlook, hinting at potential interest rate reductions of up to 75 basis points throughout the year.
This forecast serves to moderate any significant increases in US bond yields, possibly deterring USD investors from initiating new positions and acting as a supportive factor for Gold.
Market participants are now advised to look for a sustained selling trend before concluding that XAU/USD has reached a short-term peak, with Fed Chair Jerome Powell’s upcoming speech poised to offer further market direction.
- US Economic Growth Outlook: The Federal Reserve revised its economic growth forecast upwards, now expecting real GDP growth of 2.1% by the year’s end, up from the December projection of 1.4%.
- Inflation and Unemployment Projections: Inflation forecasts were also adjusted, with core inflation expected to reach 2.6%, up from 2.4%, and the unemployment rate anticipated to drop to 4% by 2024, slightly below the previously forecasted 4.1%.
- Labor Market Resilience: The US Department of Labor reported a decrease in Initial Jobless Claims to 210,000 for the week ending March 16, down from 212,000, indicating continued strength in the labor market.
- Geopolitical Developments: US Secretary of State Antony Blinken noted progress in talks aimed at achieving a ceasefire in Gaza and securing the release of hostages, contributing to a boost in investor confidence.
As the financial community awaits further guidance from Fed Chair Jerome Powell, the combined impact of economic forecasts, labor market data, and geopolitical progress will play a crucial role in shaping the future trajectory of Gold (XAU/USD) prices.
Gold Price Forecast – Technical Outlook
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