Gold
Gold (XAU/USD) Nears $2,200 Amid Fed’s Rate Cut Speculation; Buy Now?
Arslan Butt•Thursday, March 28, 2024•2 min read
Gold (XAU/USD) recent climb to $2,195.59, achieving a 0.75% increase, suggests potential for continued advancement. Currently, Gold trades with caution below the $2,200 threshold, reflecting a hesitancy among investors who await further clarity on the Federal Reserve’s monetary strategy.
This anticipation has subdued the market’s momentum, directing attention to the forthcoming US Personal Consumption Expenditures (PCE) Price Index. This crucial economic indicator, due for release on Friday, is expected to significantly influence the US Dollar’s strength and subsequently, Gold’s valuation.
Fed’s Hawkish Stance May Limit Gold’s Upsurge
Recent hawkish comments from Fed Governor Christopher Waller have tempered expectations for immediate rate cuts, potentially restraining Gold’s gains.
Despite this, the Fed’s forecast for a less stringent monetary policy, suggesting a 75 basis points rate reduction in 2024, provides some support to Gold prices by dampening bullish sentiment for the US Dollar.
Supporting Factors for Gold
- Federal Reserve Insights: Governor Waller’s cautious stance on rate reductions contrasts with the Fed’s projected rate cuts, offering mixed signals to Gold investors.
- Equity Market Dynamics: The current subdued state of equity markets bolsters Gold’s appeal as a haven, mitigating risks of significant price corrections.
- Geopolitical Tensions: Ongoing geopolitical conflicts, including the Russia-Ukraine war, add a layer of support for Gold, highlighting its status as a refuge during times of uncertainty.
Investors now anticipate the US economic data releases scheduled for Thursday, including the final GDP figures for Q4, Weekly Initial Jobless Claims, Pending Home Sales, and the revised Michigan Consumer Sentiment Index.
Gold Price Forecast: Technical Outlook
Gold’s recent ascent to $2,195.59, marking a notable 0.75% rise, positions it for further gains. Trading above a pivotal $2,185.00, it eyes resistance at $2,200.57, with the potential to stretch towards $2,220.42 and $2,237.75.
Support lies at $2,174.67, safeguarding against downturns to $2,162.72 and $2,147.84. The Relative Strength Index (RSI) at 61, alongside a supportive 50-day Exponential Moving Average (EMA) at $2,173.83, signal a bullish momentum, hinting at a continued upward trajectory if gold remains above $2,185.00.
Conversely, dipping below this critical level could catalyze a sell-off, underscoring the importance of maintaining current levels for bullish prospects.
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ABOUT THE AUTHOR
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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.
His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.
His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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