Новини ринків
20.03.2024, 10:58

Gold price remains on the backfoot ahead of Fed policy meeting

  • Gold price falls further as US Dollar rises ahead of Fed’s monetary policy announcement.
  • The Fed’s dot plot will be the key trigger in the monetary policy meeting.
  • US Treasury yields fall modestly but broadly remain firm.

Gold price (XAU/USD) remains under pressure as investors await the Federal Reserve’s (Fed) monetary policy decision, which will be announced at 18:00 GMT. The Fed is expected to maintain interest rates unchanged as the victory against stubborn United States inflation is still out of sight. Investors will keenly focus on the Fed’s dot plot and economic forecasts, which will indicate interest rate projections and the outlook on the US economic performance, respectively.

Market participants will also pay attention to Fed Chair Jerome Powell’s press conference to get cues about the timing of rate-cuts. Currently, expectations for the Fed lowering interest rates in the June meeting have eased somewhat. Fed policymakers said they want to see inflation easing for months as evidence to confirm that price growth will return to the 2% target. However, inflation data for the first two months of 2024 signaled that price pressures remain sticky.

Meanwhile, 10-year US Treasury yields have come down gradually to 4.28% from their three-month high of 4.35%. A hawkish Fed guidance would increase yields on Treasury bonds. Ahead of the Fed, the US Dollar Index (DXY) continues its winning spell for the fifth trading session as stubborn inflation pressures have cast doubts over the Fed’s prior three rate-cut projections for this year.

Daily digest market movers: Gold price drops as US Dollar strengthens

  • Gold price falls slightly to $2,150 amid uncertainty ahead of the Federal Reserve’s interest rate decision. The Fed is widely anticipated to keep interest rates unchanged in the range of 5.25%-5.50% for the fifth time in a row. Therefore, market participants will majorly focus on the Fed’s dot plot and economic projections.
  • The Fed’s dot plot, which is updated quarterly, shows policymakers’ projections for interest rates over different time frames. December’s dot plot indicated that policymakers saw back then three rate cuts for 2024 and believed that the rate-tightening campaign had peaked. 
  • Fed policymakers have been reiterating that rate cuts are appropriate only if they get evidence that inflation is declining towards 2% in a sustainable manner. For interest rate decisions, Fed policymakers generally consider the core Consumer Price Index (CPI) data as it remains free from the impact of volatile food and energy prices. Core inflation has remained broadly sticky in the first two months of 2024, adding to speculation that the Fed will project fewer than three rate cuts for this year. If this happens, it would increase the opportunity cost of investment in non-yielding assets such as Gold, weighing on its price.
  • The CME FedWatch Tool shows that there is a 60% chance that at least three rate cuts will be announced by 2024. The chances for at least three rate cuts were slightly below 80% prior to the release of the February hot consumer and producer inflation data. Higher-than-expected US producer and consumer inflation has also dented market expectations for the Fed to begin rate cuts in the June policy meeting.
  • Later this week, investors will focus on the preliminary S&P Global Manufacturing and Services PMI for March. The Manufacturing PMI is anticipated to fall to 51.7 from 52.2 in February.

Technical Analysis: Gold price faces selling pressure near $2,160

Gold price falls after facing stiff pressure near the crucial resistance of $2,160. The precious metal trades inside Tuesday’s trading range. it is likely to break the consolidating trend after the Fed’s policy meeting. 

The precious metal may continue its downside towards the 20-day Exponential Moving Average (EMA) at $2,097. After a wide divergence, the asset tends to face a mean-reversion move, which results in a price or a time correction.

On the downside, December 4 high near $2,145 and December 28 high at $2,088 will act as major support levels.

The 14-Relative Strength Index (RSI) retraces from its peak near 84.50, although the upside momentum is still active.

 

Gold FAQs

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

 

© 2000-2024. Уcі права захищені.

Cайт знаходитьcя під керуванням TeleTrade DJ. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

Інформація, предcтавлена на cайті, не є підcтавою для прийняття інвеcтиційних рішень і надана виключно для ознайомлення.

Компанія не обcлуговує та не надає cервіc клієнтам, які є резидентами US, Канади, Ірану, Ємену та країн, внеcених до чорного cпиcку FATF.

Політика AML

Cповіщення про ризики

Проведення торгових операцій на фінанcових ринках з маржинальними фінанcовими інcтрументами відкриває широкі можливоcті і дає змогу інвеcторам, готовим піти на ризик, отримувати виcокий прибуток. Але водночаc воно неcе потенційно виcокий рівень ризику отримання збитків. Тому перед початком торгівлі cлід відповідально підійти до вирішення питання щодо вибору інвеcтиційної cтратегії з урахуванням наявних реcурcів.

Політика конфіденційноcті

Викориcтання інформації: при повному або чаcтковому викориcтанні матеріалів cайту поcилання на TeleTrade як джерело інформації є обов'язковим. Викориcтання матеріалів в інтернеті має cупроводжуватиcь гіперпоcиланням на cайт teletrade.org. Автоматичний імпорт матеріалів та інформації із cайту заборонено.

З уcіх питань звертайтеcь за адреcою pr@teletrade.global.

Банківcькі
переклади
Зворотній зв'язок
Online чат E-mail
Вгору
Виберіть вашу країну/мову