{"id":76703,"date":"2024-02-06T12:18:52","date_gmt":"2024-02-06T10:18:52","guid":{"rendered":"https:\/\/ironfx-com-php8.wp-dev.int.theitops.net\/?p=76703"},"modified":"2024-02-06T12:19:36","modified_gmt":"2024-02-06T10:19:36","slug":"gold-outlook-sideways-motion-maintained","status":"publish","type":"post","link":"https:\/\/www.ironfx-id.com\/fa\/gold-outlook-sideways-motion-maintained\/","title":{"rendered":"Gold Outlook: Sideways motion maintained"},"content":{"rendered":"

The high volatility that was present in the gold markets during the past week<\/a>, provided a rollercoaster ride for gold\u2019s price, yet the precious metal\u2019s price remained in a largely sideways motion. 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.<\/p>\n\n\n\n

The Fed\u2019s intentions<\/strong><\/h2>\n\n\n\n

On the monetary front, we note that the Fed remained on hold as was widely expected. In its accompanying statement, the bank seems to be taking its time regarding the possibility of any rate cuts. Fed Chairman Powell in his press conference stated that March is not a base scenario for rate cuts. Please note that the market had already shifted before the release, expecting the first rate cut in May. The market seems to expect the bank currently to deliver 5 rate cuts until the year has ended. We tend to be even less dovish and suspect that the bank may start cutting rates in the summer and deliver 3-4 rate cuts in the current year, a scenario that if materialized could keep USD supported on a monetary level. Given the negative correlation characterising gold and the USD, such a scenario may start weighing on gold\u2019s price over the first half of the year. Yet we would expect to see more signals regarding the Fed\u2019s intentions in the coming few days as Fed policymakers are to proceed with their post-decision statements.<\/p>\n\n\n\n

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

On the monetary front, we note that the Fed remained on hold as was widely expected. In its accompanying statement, the bank seems to be taking its time regarding the possibility of any rate cuts. Fed Chairman Powell in his press conference stated that March is not a base scenario for rate cuts. Please note that the market had already shifted before the release, expecting the first rate cut in May. <\/p>\n\n\n\n

The market seems to expect the bank currently to deliver 5 rate cuts until the year has ended. We tend to be even less dovish and suspect that the bank may start cutting rates in the summer and deliver 3-4 rate cuts in the current year, a scenario that if materialized could keep USD supported on a monetary level. <\/p>\n\n\n\n

Given the negative correlation characterising gold and the USD, such a scenario may start weighing on gold\u2019s price over the first half of the year. Yet we would expect to see more signals regarding the Fed\u2019s intentions in the coming few days as Fed policymakers are to proceed with their post-decision statements.<\/p>\n\n\n\n

January\u2019s employment report<\/strong><\/strong><\/h2>\n\n\n\n

The main market mover of the past week may have been the release of the US employment report for January. The release shook the markets as, despite consensus for an easing of the tightening of the US employment market, the actual rates and figures highlighted its resilience. It\u2019s characteristic that the Non-Farm Payrolls figure instead of dropping as expected, rose to 353k and the jump highlighted the ability of the US employment market to create new jobs. <\/p>\n\n\n\n

At the same time, the unemployment rate failed to tick up and remained unchanged at 3.7%, highlighting the continuance of the tightness of the US employment market. The release as such, tends to allow more leeway for the Fed to maintain rates high for a longer period, as one part of its mandate, promoting employment, is covered and forces the bank\u2019s focus on bringing inflation down to its 2% target.<\/p>\n\n\n\n

Furthermore, the release tends to underscore the narrative of the bank for a possible soft landing of the US economy. Market-wise, the release obliged the market to reposition itself and provided substantial support for the USD in Friday\u2019s American session, weighing on the gold\u2019s price again.<\/p>\n\n\n\n

US yields and upcoming releases<\/strong><\/h2>\n\n\n\n

We expect fundamentals to guide gold\u2019s price in the next few days given the low number of US high-impact financial releases expected, with special focus being on the Fed\u2019s intentions. Yet we would note the release of the US CPI rates for January next Tuesday, as the next big test for gold\u2019s price. Should the rates slow down further, we may see the release weighing on the USD and thus providing a lift to gold\u2019s price. We also note the path of US yields given the competitiveness between gold and US bonds as safe-haven assets. Should US yields continue to rise, we may see them having an adverse effect on gold\u2019s price, as attention may be shifted towards US bonds, given also that the Gold is non-interest bearing asset.<\/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