Gold price increased by $150 in March. This is also its best month since July 2020. Gold has a lot more positive aspects, including testing in April and breaking record highs, according to analysts who saw markets contradict the Fed’s message.
Now Fed less likely to be overly hawkish
The gold market finishes March just under $2,000. This marks an increase of 7% per month and 9% year-to-date. It’s also the yellow metal’s best monthly performance since July 2020 and its best quarterly result since Q2 2020. cryptocoin.comAs you follow in , the collapse of Silicon Valley Bank three weeks ago triggered the banking crisis that revised the Federal Reserve outlook from more rate hikes to rate cuts. Bart Melek, head of global commodity strategy at TD Securities, comments:
This could turn into a financial crisis. In a significantly tighter environment, there was a sharp decline in the market value of assets on the books in the regional banking sector. Not only was there a loss in market value, but there were also large deposit outflows to less restrictive banks. The Fed is less likely to be over-hawkish as we enter 2023.
This is a strong sign and very encouraging for gold bulls
Gold is still trading higher despite turbulence easing. Everett Millman, precious metals specialist at Gainesville Coins, said, “Although banking fears have eased for now, the price of gold has not dropped much. This is a strong sign and very encouraging for gold bulls.”
While the Fed hasn’t signaled that it’s discussing a rate cut, markets are starting to price it out. “With bank space turbulence and inflation pointing down, I suspect the market is outpacing most of the Fed’s hawkish rhetoric and forecasting a pivot that is significantly ahead of the dot charts,” says Bart Melek.
TD Securities quarterly gold price forecasts
Investors will be keeping a close eye on the incoming data as a weaker-than-expected figure increases the likelihood of a rate cut this year. “The risk of a hard landing for the economy is increasing,” said James Knightley, ING chief international economist. This increases the chances of inflation falling faster and allows the Fed to respond with rate cuts before the end of this year.”
Next week, traders will receive the March employment report. Market consensus estimates are that the US economy added 240,000 jobs and the unemployment rate remained at 3.6%. Following the March events, TD Securities now forecasts gold to average $1,975 in the second quarter, $2,050 in the third quarter, and $2,100 in the fourth quarter.
The first to react to this will be the price of gold.
Everett Millman warns that the gold market may suffer some losses in the short term. “There are some downside risks. “A relief rally in equities could bring some money out of gold,” he says. According to Millman, a solid support level is near $1,900 and $1,850, and close resistance stands at $2,000 followed by $2,060-$70. Based on this, the analyst makes the following comment:
When you look at shorts and longs in gold futures, the sentiment is still pretty neutral. If you see a surge in public perception, such as what’s going on with the dollar or the US economy, that could change the mood. In this case, the gold price will be the first to react to this.
Gold price technical analysis: We are about to see an explosive move
Technical analyst Christopher Lewis looks at this week’s drawing of gold. Gold markets initially fell during the trading week, but then found buyers as we continued to threaten the $2,000 level in the futures market. Frankly, this is a market that appears to be a bit of the ‘beach ball held underwater’ situation. Which means it can be explosive once we go up. After all, we created a hammer last week and did it again last week. In other words, the pressure is mounting and we need to make a bigger decision.
At this point, it definitely looks bullish and that makes a lot of sense given that central banks around the world are buying gold. But more importantly, there is a lot of concern when it comes to the banking system. After all, no matter what people tell you about Bitcoin or anything else, at the end of the day most of the wealth has been stored in precious metals for the last 50 centuries.
However, if we go below the bottom of the previous candle, it turns it into a ‘hanging man’. Therefore, it can create selling pressure. The first target will be the $1,900 level, followed by the 50-Week EMA. It’s worth noting, however, that we continue to build up a lot of pressure. But you can also say that the $2,000 level has a lot of resistance extending all the way up to the $2,050 level. Ultimately, we’re about to see explosive action and the raders’ job will be to track it down.
Next week’s data
- Monday: ISM manufacturing PMI
- Tuesday: US factory orders
- Wednesday: US ADP non-farm employment, ISM services PMI
- Thursday: US unemployment claims
- Friday: US nonfarm payrolls
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