The Federal Reserve’s interest rate cut predictions cause dollar and bond yields to fall. Large gold purchases by central banks underline strong market demand. According to analysts, gold prices may rise to $2,300 by the end of 2024.
Federal Reserve’s impact on gold prices
Gold prices rose to record levels on Thursday, driven by the Federal Reserve’s stance on interest rates, global central bank buying trends and changing currency dynamics. This significant rise is consistent with expectations of upcoming rate cuts and a complex international economic environment.
cryptokoin.comAs you follow from , the Fed predicts three interest rate cuts this year. This led to a decline in the US dollar and bond yields. This change reduces the cost of holding non-returnable gold. Thus, it increases its attractiveness, especially for investors using other currencies. Despite the high inflation figures, Fed Chairman Jerome Powell emphasized that price pressures are gradually easing in the USA. This perspective weakened the dollar and increased the appeal of gold.
Market reactions to the Fed’s decision and stance
Markets quickly adapted to the Fed’s position. He now predicts a 75% chance of a rate cut in June. After this, the dollar index stabilized at 103.23. While dollar and bond interest rates decreased, gold prices gained upward momentum and reached new peaks. Analysts predict that it may rise to $2,300 by the end of 2024 due to the impact of interest rate cuts expected in the USA.
Global central bank activities and gold demand
Central banks around the world play an important role in supporting gold prices. In 2023, the People’s Bank of China stood out as the largest gold buyer. Poland and Singapore also made significant purchases. These purchases, motivated by financial stability amid geopolitical tensions, ensured the continuation of strong gold prices. Additionally, individual gold demand, especially in China and India, also significantly affects the price of the metal.
Short-term gold price outlook and technical analysis
Market analyst James Hyerczyk evaluates the technical outlook for gold. The short-term outlook for gold is bullish, driven by a combination of the Federal Reserve’s dovish stance, strong physical demand and extensive central bank purchasing. These factors collectively create an environment conducive to further price increases. However, investors need to remain alert to central bank actions and global economic signals. Because these will significantly affect the trend of the gold market.
Gold is on the rise on Thursday. However, it is well away from its intraday high of $2,222.915. This indicates a volatile but bullish outlook. Short-term support is $2,184.53. With the trend rising, new buyers may emerge in case of a pullback towards this level. Once again, the choice for bullish traders is to chase higher prices or play for a pullback. Investors also need to determine how much of the Fed news is priced into the market. A lower close today or a trade through the $2,146.15 low would signal significant weakness.
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