Gold prices started the week with a slight increase. However, it still has a somewhat stagnant market outlook. Perhaps the market is waiting for the outcome of the FOMC meeting on Wednesday. After this, investors can take larger positions, analysts say.
Safe haven appeal is on the rise
Gold prices rose relatively slightly early Tuesday, driven by a decline in U.S. Treasury yields, a slight decline in the U.S. dollar and rising geopolitical tensions in the Middle East. cryptokoin.comAs you follow from , the interest rate decision of the Federal Reserve, which is the focus of the markets, will come on Wednesday. Investors are waiting for the meeting’s decision and Fed Chairman Jerome Powell’s speech for potential clues.
Meanwhile, Treasury bond yields fell to their lowest level in the last two weeks. Additionally, the US Dollar Index (DXY) fell 0.1%. These developments were the main factors contributing to the rise of gold. These factors make gold more attractive by reducing the opportunity cost of holding non-returning assets. Additionally, increasing tension in the Middle East increases the attractiveness of gold as a safe haven. However, it remains unclear to what extent this affects market position ahead of the Fed meeting.
Federal Reserve’s impact on gold prices
The market is closely watching the Fed’s upcoming decision on key policy rates and comments from Chairman Jerome Powell. It is possible that these will significantly direct the future direction of gold. While current expectations keep gold prices stable, geopolitical uncertainties give gold a slight upward support.
Key economic data, including the personal consumption expenditures price index (PCE) and upcoming labor market figures, are crucial to assessing the state of the economy and the impact of interest rates. The prevailing expectation in the market is that the Fed will maintain current interest rates. However, attention has turned to future rate cut guidance. Investors have almost completely eliminated the possibility of the Fed’s first interest rate hike in March. Now indicators point to May for a dovish move.
Short-term market outlook and technical picture
Market analyst James Hyerczy evaluates the short-term outlook and technical picture of gold. In the short term, the outlook for gold is bullish with a cautious tone. Lower Treasury yields, a softer dollar and geopolitical tensions, as well as the Fed’s upcoming policy decision, are likely to support gold prices. However, investors need to closely follow the Fed’s statements and important economic data. Because these may cause volatility in gold prices. Fed Chairman Jerome Powell’s speech on Wednesday will likely be the catalyst for short-term action.
Gold is rising early Tuesday after breaking decisively to the strong side of the 50-day moving average in an uptrend at $2,029.19. This helps the intermediate trend find support. With gold holding above this new support level, it is possible for the market to gain new momentum. Thus, it is likely to put its next upside target at $2,067.00 on the radar. Failure to hold above the 50-day MA will reverse the short-term trend back down with the next support level at $2,009.00. If this area fails to attract buyers’ attention, the 200-day MA at $1,964.48 will become the next target.
Gold price technical analysis
Technical analyst Christopher Lewis explains what he sees in the technical picture of gold as follows. Gold was quite volatile earlier in the week as it continued to look for some sort of larger move. It is worth noting that the market is using the 50-day EMA below, which offers major support and short-term pullbacks provide buying opportunities, especially the 2,000 level below which is a significant barrier zone, which is more or less a support barrier zone up to the $1,980 level.
Overall, this is a situation where you’ll probably continue to see a lot of value hunting. But we can just take off, and if we do, $2,040 will be the next target. After that, $2,060 is next, followed by $2,075. Anything above the $2,075 level would really cook the market. So, it becomes a buy and hold scenario at that point. On the other hand, a break below the $1,980 level for gold prices would mark a rather significant turn of events and a change in attitude.
Keep in mind that the Fed’s meeting on Wednesday will likely be a big event. This is possible if they surprise the markets rather than the decision. But I will focus on the press conference. Where are Americans heading on monetary policy? How fast are they moving? That kind of thing. The looser the monetary policy statement, the more bullish this will be for gold prices. Of course, the opposite is also true. Pay attention to interest rates in the US because if they fall, that will help gold too. So we’ll have to wait and see how this plays out. But I have absolutely no intention of selling, at least as long as we are above that critical $1,980 level. With all this said, position size will be very important. But over the long term, I believe gold will probably continue to be a very important asset to own due to geopolitical concerns and everything mentioned before.
To be informed about the latest developments, follow us twitter‘in, Facebookin and InstagramFollow on and Telegram And YouTube Join our channel!