The gold price is maneuvering in a very complex market environment. The Federal Reserve’s current hawkish stance has become evident with its hesitation to cut interest rates in the near term. This is a critical factor affecting the market. Therefore, this typically leads to a strengthening of the US Dollar. This has historically had a downward impact on gold prices. However, gold struggles with numerous economic indicators that affect its value in different ways. Therefore, the current scenario is not that simple.
Fed kept interest rates steady, but pushed back early interest rate cut!
cryptokoin.comAs you follow from , the Federal Reserve kept interest rates constant between 5.25% and 5.50%, in line with expectations. However, analysts say they are more interested in the central bank’s possible forward guidance on when the easing cycle will begin. According to its latest monetary policy statement, the Fed remains very optimistic about economic activity despite the risks looming on the horizon. So he probably won’t rush to adjust monetary policy.
Central Bank committee members made clear that although inflation pressures have eased, they still remain their top priority. “The committee does not consider it appropriate to reduce the target range until we gain greater confidence that inflation is sustainably moving towards 2 percent,” the statement said. The gold market is not overreacting to the latest comments from the Fed. Although the monetary policy announcement supported the upward momentum in the US dollar, the gold price remains stable. Adam Button, chief currency strategist at Forexlive.com, notes that the Fed appears to be pushing back on the idea of a potential March rate cut. That’s why the Fed statement has a slightly hawkish bent, he says.
Paul Ashworth: March is not completely off the table!
Capital Economics North America Chief Economist Paul Ashworth draws attention to the Fed’s tone. Ashworth says that despite the Fed’s statement, a possible interest rate cut in March is not off the table yet. In this context, Ashworth makes the following assessment:
While at first glance this language appears to be aimed at pushing back the timing of rate cuts currently priced in futures markets, we’re not so sure. If the Fed really wanted to change market expectations, it could say it would be “patient” about removing the relief. Instead, what we have is mostly a restatement of the current position that everything depends on data.
Short-term market outlook: A cautious upside for the gold price
Market analyst James Hyerczyk evaluates the short-term outlook and technical picture of gold following the latest developments. In light of recent developments, the short-term outlook for the gold price is cautiously bullish. The combination of a hawkish Fed, a strong US Dollar, falling Treasury yields and banking industry concerns creates a complex but potentially favorable environment for gold.
It is beneficial for investors to be prepared for volatility. They should closely monitor the Fed’s upcoming policy decisions and other developments in the banking industry. These factors will be crucial in determining the direction of the gold price in the coming weeks. Additionally, a careful balancing of these factors will likely support gold prices.
Gold price rose marginally on Thursday. However, it remains above the 50-day moving average, which keeps the medium-term uptrend intact. If this move continues to show enough upside momentum, look for a drive towards the pivot $2,067.00 level. This is a potential trigger point for an acceleration towards new all-time highs. Conversely, failure to hit the 50-day MA would be a sign of weakness and increasing selling pressure. It is possible that this could lead to a quick test of the support at $2,009.00. If it breaks this level with conviction, it would likely lead to a decline to the 200-day moving average at $1,964.95.
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