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GOLD PRICE OUTLOOK
- Gold prices fell this week but still rose more than 5% in March
- The Federal Reserve monetary policy The announcement will take center stage next week.
- This article examines XAU/American dollarTechnical outlook and key price levels.
Most read: EUR/USD stabilizes at support ahead of key Fed decision: Outlook and analysis
Gold prices (XAU/USD) retreated this week, falling around 1.05% to $2,155, dragged down by the rally in US Treasury yields and the US dollar. Despite this setback, the precious metal maintains strong bullish momentum, as reflected by its March year-to-date performance, which has produced a gain of around 5.5% and led to recent all-time highs.
PERFORMANCE OF GOLD, US DOLLAR AND US YIELD
Source: TradingView
Earlier this month, bullion rose sharply on bets that the Federal Reserve would soon begin cutting interest rates. The rally accelerated after Federal Reserve Chairman Jerome Powell indicated in a congressional appearance that authorities were “not far off” from gaining greater confidence in the inflation outlook to adopt a less restrictive stance.
Markets became overexcited with Powell’s comments, giving bullish investors a reason to push XAU/USD higher. However, the picture has begun to change in recent sessions, with a new story developing in the wake of disappointing consumer price data, revealing a stark reality: progress on disinflation is stalling and possibly even reversing.
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Now that upside inflation risks are beginning to materialize, as seen in the last two CPI and PPI reports, traders should not be surprised if the central bank begins to take a more aggressive stance, signaling that more is needed. patience before removing political restrictions and that rates must be reduced. Cuts larger than initially anticipated are likely once the process gets underway.
We’ll know more about the Federal Reserve’s plans next week (Wednesday) when the institution announces its March decision. While the authorities are seen as leaving their policies unchanged, they could provide different guidance and forecasts in response to new information on the macroeconomic front; After all, data dependency has been the guiding principle.
In the latest Summary of Economic Projections, the Federal Reserve hinted that it would implement 75 basis points of easing this year and market prices have converged to this estimate lately. If authorities were to signal their intention to implement fewer cuts than are currently priced in, we could see bond yields and the US dollar rise. This should be bearish for gold prices.
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Change in |
Long pants |
Bermuda |
I HEARD |
| Daily | 1% | -3% | -1% |
| Weekly | 14% | -2% | 5% |
GOLD FORECAST – TECHNICAL ANALYSIS
Gold prices fell this week but managed to stay above the $2,150 support. Bulls must actively protect this technical zone to avoid escalating selling pressure; Failure to do so could trigger a pullback towards $2,085. In case of further weakness, the focus will be on $2,065.
On the other hand, if buyers regain decisive control of the market and cause a bullish reversal of the metal’s current position, the first hurdle lies at the record high set earlier this month at $2,195. Further bullish movement will draw attention to the trendline resistance near $2205.