Gold (XAU/USD) Price Forecast: Drops to $2304 Amid Fed’s Hawkish Signals
The price of Gold (XAU/USD) concluded its four-day climb, dipping under the $2,300 mark on Thursday. Despite this, the metal found
The price of Gold (XAU/USD) concluded its four-day climb, dipping under the $2,300 mark on Thursday. Despite this, the metal found some buyers during the Asian trading session on Friday, signalling resilience among investors.
However, a sustained upward trajectory remains uncertain due to recent hawkish signals from the Federal Reserve.
On Wednesday, the Fed’s “dot plot” revealed plans for just one interest rate cut in 2024, potentially dampening the allure of the non-yielding metal. Concurrently, buoyant global equity markets could further restrain gold’s traditional gains as a haven.
2/ Perhaps the most unexpected development on Wednesday was the Fed’s dot plot, now indicating just one rate cut instead of two. Rather than a 75 basis points (bps) decrease, the market might only experience a 25bps reduction in 2024. — Image source @zerohedge. pic.twitter.com/7lbkQuxIgm
— Bitcoin.com News (@BTCTN) June 12, 2024
Impact of Fed’s Hawkish Stance:
The Federal Reserve’s projection to reduce interest rates only once in 2024 compared to the previously anticipated three cuts might bolster the U.S. Dollar, consequently pressuring gold prices.
Summary-
What’s going on here?
Euro zone borrowing costs jumped on Thursday after a surprising shift in the Federal Reserve’s outlook for 2024 rate cuts.
What does this mean?
In a notable twist, Fed policymakers dialed back their median projection for 2024 rate cuts from… pic.twitter.com/XXhxyHykwb
— josette caruso (@josettecaruso) June 13, 2024
Nonetheless, this week’s milder inflation metrics hinted at possible earlier rate reductions, supported by the CME Group’s FedWatch Tool, which now shows a heightened likelihood of a rate cut as early as September.
Data and Political Dynamics Offer Mixed Cues:
Recent U.S. economic data painted a mixed picture. The Producer Price Index (PPI) for May increased by 2.2% year-on-year, below expectations and the prior month’s readings, suggesting subdued inflationary pressures.
Despite these figures and a static Consumer Price Index (CPI) for May, geopolitical tensions and political uncertainty in Europe, especially with France’s upcoming snap election, provide some downside protection for gold prices.
Investors are now eyeing the Preliminary Michigan US Consumer Sentiment Index, slated for release on Friday. This data could sway U.S. Dollar movements and offer fresh cues for short-term gold price predictions, as traders gauge consumer confidence in the face of evolving economic conditions.
Gold Price Forecast: Technical Outlook
In today’s market, Gold (XAU/USD) edges slightly higher, currently priced at $2304.81, marking a modest increase of 0.03%. The metal navigates a complex landscape shaped by a critical pivot at $2311.21.
Over the four-hour trading window, gold faces substantial resistance at $2325.10, with further hurdles at $2336.79 and $2348.12. Should momentum shift, the metal’s support levels at $2287.82, $2271.74, and $2254.20 will be tested.
Technical indicators paint a nuanced picture; the Relative Strength Index (RSI) hovers at 43, suggesting a bearish undertone in the market.
Additionally, the 50-Day Exponential Moving Average (EMA) sits at $2324.71, reinforcing resistance near the pivot point. The analysis indicates a bearish trend below $2311, but a climb above this threshold could ignite a more bullish sentiment.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
Related Articles
Comments
Sidebar rates
Related Posts
Save
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals