The gold price turned green again on Monday after losing two weeks in a row. Gold is experiencing a modest recovery thanks to escalating geopolitical tensions between the Middle East and the US. Meanwhile, the markets will closely follow the Fed’s interest rate decision and Jerome Powell’s speech this week.
TDS: Gold price is heading towards all-time highs!
Gold prices are hovering near all-time highs. According to TD Securities strategists, the balance of risks in gold prices is to the upside. As US data remains strong, the Fed could use trends in core PCE to justify the start of rate cuts, strategists say. The Fed wants to engineer a soft landing that would allow it to emphasize disinflation over growth, strategists say. In this context, they make the following statement:
A discount cycle will likely eventually drain the capital of discretionary traders. This will support gold towards all-time highs. CTA trend followers still have a significant amount of dry powder available to them. Meanwhile, physical market purchasing activities remain strong. Also, China is buying gold at a rapid pace. All of these turn the risk balance in gold prices upward, despite hot data.
Commerzbank: Gold unlikely to make big progress!
Commerzbank strategists say what really matters for the gold price is when and by how much the Fed will cut interest rates. Strategists do not expect the Fed to fuel hopes of a rapid rate cut. Based on this, strategists make the following assessment:
Institutional investors tended to sell gold last year, as evidenced by large ETF outflows. According to the World Gold Council (WGC), 55 tons of gold were sold in the last quarter of the year. Total gold outflow last year is estimated to be just under 245 tonnes. This trend, which tends to put pressure on prices, continued in the new year. However, we assume sentiment will change as the year continues and this group of investors will increase their positions again as soon as interest rate cuts approach.
However, according to strategists, the Fed is unlikely to give any clues on this issue after its meeting next week. Strategists state that the Fed first wants to see more success in the fight against inflation.
Geopolitical risks intensify in Federal Reserve week
In the news of Reuters, based on US President Joe Biden and officials, it was stated that three US soldiers were killed and dozens may have been injured in a drone attack on US forces stationed in the northeast of Jordan, near the Syrian border. Investors are cautious about the critical week, which includes the Fed’s policy statements. started.
cryptokoin.comAs you follow from , markets are eagerly awaiting the Fed’s interest rate decision on Wednesday. In this context, the gold price started the week with an increase. However, increasing geopolitical risks also increased the safe haven demand for the US Dollar. So, according to analysts, the upward movement is under control. However, the gold price may continue to find support if risk-off market sentiment intensifies and extends the decline in US Treasury yields, increasing safe-haven flows into US government bonds.
Gold price technical analysis
Market analyst Dhwani Mehta evaluates the technical picture of gold. On the daily chart, gold price is heading to push the critical supply zone of $2,030, where the 50-day Simple Moving Average (SMA) and the 21-day SMA intersect. Gold buyers need a daily candlestick close above this level to initiate a meaningful recovery towards static resistance at $2,038. Further above, the psychological $2,050 level is likely to come into play. But the 14-day Relative Strength Index (RSI) indicator is still below the middle line. Therefore, gold buyers remain cautious.
In addition, the 21-day SMA is on the verge of crossing the 50-day SMA from above. If this happens it will confirm a “Bearsish Cross”. On the downside, an immediate cushion is seen at the ascending trend line support at $2,011, where the $2,000 barrier is likely to be retested. The next strong downside target is near the $1,975 region.
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