Gold prices are moving sideways at $1,234. Investors await the Federal Reserve’s next moves. High US interest rates are causing gold investments to be re-evaluated. Positive stocks and geopolitical risks affect the price course of gold.
The impact of US monetary policy on gold prices
Market participants are adjusting their positions ahead of the upcoming Federal Reserve meeting. Amid this wait, gold prices moved very little and remained stable at $1,234. cryptokoin.comAs you follow from , the shiny metal reached its highest levels in early April. However, it later declined due to the decrease in demand for safe havens and the expectation that US interest rates would continue to rise.
The PCE price index for March came in higher than expected, with 0.3% monthly and 2.7% annually. Recent US economic data, including this one, has reinforced belief that the Fed will maintain higher interest rates for an extended period of time. Now, there is a possibility that interest rate cuts will be postponed until September or later. This increases the opportunity cost of holding non-return assets such as gold. Despite recent declines, gold prices have been rising year on year on concerns that prolonged high interest rates could dampen global economic growth.
Market dynamics and external factors
As of the last trading session, gold struggled to sustain the modest gains of the previous days. For this reason, prices decreased slightly at the beginning of the week. Positive stock performance and broader market sentiment influenced by ongoing geopolitical risks such as the Russia-Ukraine conflict continue to influence gold prices. Additionally, fluctuations in the US dollar, which has rebounded sharply against the Japanese Yen and fallen from two-week lows, have affected gold as it is inversely proportional to the strength of the dollar.
Important developments to watch:
- FOMC Meeting and US Economic Data: The market is preparing for the Fed’s views on future monetary policy and major economic announcements. The outcome of these discussions will likely affect the market’s interest rate expectations. Therefore, this will have a significant impact on gold prices.
- Geopolitical Tensions: Ongoing conflicts and peace talks, especially between Israel and Hamas, affect market sentiment. Therefore, it is possible that this will affect the safe haven demand for gold.
- Inflation Indicators: Persistent inflation is likely to strengthen gold’s role as an inflation hedge. Additionally, the price trajectory could be affected, especially if inflation remains above the Fed’s target rate of 2%.
Gold prices technical view
Market analyst Arslan Ali evaluates the technical picture of gold. Gold prices are currently trading at $2,334.82, down slightly by 0.20%. The precious metal is just above the pivot point at $2,325.66. If it can stay above this threshold, it indicates potential upward momentum. The immediate resistance lies at $2,370.56, with other hurdles at $2,418.45 and $2,463.94.
Conversely, if gold falls below the pivot, $2,290.40 and then $2,248.71 come into play. Moreover, it is likely to face a significant support at $2,212.49. The 50-day Exponential Moving Average (EMA) is at $2,339.52, slightly above the current price, while the 200-day EMA at $2,276.85 supports a longer-term bullish outlook. The technical setup indicates a bullish stop above $2,325.66. However, falling below this level is likely to trigger a sharper decline.
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