{"id":78306,"date":"2024-03-19T15:14:30","date_gmt":"2024-03-19T13:14:30","guid":{"rendered":"https:\/\/ironfx-com-php8.wp-dev.int.theitops.net\/?p=78306"},"modified":"2024-03-19T15:14:30","modified_gmt":"2024-03-19T13:14:30","slug":"gold-outlook-price-stabilises","status":"publish","type":"post","link":"https:\/\/www.ironfx-id.com\/ar\/gold-outlook-price-stabilises\/","title":{"rendered":"Gold Outlook: Price stabilises?"},"content":{"rendered":"

Gold\u2019s price seems to be edging lower since last week’s report<\/a>, hitting a ceiling at the all-time high level of $2195 per ounce , yet it\u2019s still too early to judge whether the bulls gave up and the bears took over. Today we are to discuss the fundamental challenges laid ahead for the precious metal, while we will be concluding this report with a technical analysis of gold\u2019s daily chart.\u00a0<\/p>\n\n\n\n

Gold, USD and US Yields<\/strong> <\/strong><\/h2>\n\n\n\n

Since our last report, gold\u2019s price edged lower while on the other hand the USD clearly strengthened against its counterparts. The movement of the two trading instruments, tends to highlight their negative correlation as the market perceives it, albeit at some points the negative correlation eases, or even is not expressed by the market. Yet in the past week the release of the US CPI and PPI rates for February on Tuesday and Thursday respectively underscored the negative correlation of gold and the USD. <\/p>\n\n\n\n

The release tended to highlight the persistence of inflationary pressures in the US economy providing support for the USD which in turn weighed on gold\u2019s price. Similarly, we also note the substantial rise of US yields since our last report which may have been an additional factor weighing on gold\u2019s price, as they may have made US bonds a more attractive alternative to gold as an investment, given that gold bears no interest<\/p>\n\n\n\n

The Fed\u2019s interest rate decision<\/strong><\/h2>\n\n\n\n

We expect the next big test for gold\u2019s price is expected to be the release of the Fed\u2019s interest rate decision tomorrow. The bank is expected to remain on hold, keeping rates at the 5.25-5.50% range. Currently, Fed Fund Futures (FFF) imply a probability of 99% probability for such a scenario to materialise, rendering the interest rate decision largely as an open and shut case. <\/p>\n\n\n\n

Hence we may see the market attention turning to the accompanying statement, the new dot plot and Fed Chairman Powell\u2019s press conference, half an hour later, in an effort to find more clues about the bank\u2019s intentions. We should note that FFF also imply that the market, currently, expects the bank to start cutting rates in June and deliver 3 rate cuts in total. <\/p>\n\n\n\n

From the gold trader\u2019s approach, we have to keep in mind the negative correlation of the USD with Gold, as explained before. Hence anything that could support the USD, it could also have a negative impact on gold\u2019s price. Should we break down the three prementioned remaining elements, we note that should the accompanying statement and Fed Chairman Powell\u2019s press conference, be characterised by a hawkish tone, contradicting market expectations, we may see the USD getting some support and thus exercising a bearish pressure on gold\u2019s price, while should the bank allow for some innuendos that rate cuts are nearing we may see USD weakening and gold getting some support. <\/p>\n\n\n\n

On the other hand, should the dot plot reaffirm the market\u2019s expectations for a total of three rate cuts in the year, we may see gold\u2019s price rising, while should the dot plot imply fewer rate cuts, possibly two, we may see gold weakening as the USD may get asymmetric support.<\/p>\n\n\n\n

Regional tensions continue to support gold\u2019s price<\/strong><\/h2>\n\n\n\n

On a deeper fundamental level, we note that uncertainty on a global level, is still pretty substantial. Issues like tensions with Russia, the war in Ukraine, Houthi rebels and the Israeli conflict with the Palestinians in Gaza, continue to create worries in the market. Any further escalation of tensions on an international level, could create demand for gold as a safe haven thus supporting its price.      <\/p>\n\n\n\n

Gold: Technical Analysis<\/strong><\/h2>\n\n\n\n

XAUUSD Daily Chart<\/em><\/strong><\/h3>\n\n\n\n
\"XAUUSD<\/figure>\n\n\n\n