Potential Rate-Cut Trajectory Of The Federal Reserve

Potential Rate-Cut Trajectory Of The Federal Reserve

Gold Price Sustains Upward Momentum as FOMC Minutes Loom

Gold price (XAU/USD) maintains its positive trend, marking the fifth consecutive day of gains and reaching a one-week high around $2,030. Positioned near the critical 50-day Simple Moving Average (SMA), this level gains significance as traders eagerly await the release of the Federal Open Market Committee (FOMC) meeting minutes. The market's attention is focused on extracting insights into the potential rate-cut trajectory of the Federal Reserve, a key factor influencing the near-term dynamics of the US Dollar and charting a new course for the non-yielding yellow metal.

Varied Factors Propel Gold Price Amid Market Dynamics

The continued ascent of Gold price is fueled by a blend of factors, including a modest devaluation of the US Dollar, geopolitical uncertainties, and the sustained strength in US bond yields. The expectation of a rate cut by the Federal Reserve in mid-2024 maintains pressure on the USD, making gold an appealing choice for buyers seeking a secure investment. Geopolitical tensions, particularly in the Middle East and the ongoing Russia-Ukraine conflict, contribute to the prevailing bullish sentiment surrounding the precious metal. Nevertheless, the market grapples with a nuanced situation as optimism about additional stimulus from China and higher US Treasury bond yields may potentially impede the initiation of fresh bullish positions on XAU/USD.

Gold Price Responds to Dynamic Market Influences

Gold price experiences fluctuations influenced by several pivotal events in the market. The ongoing pricing of multiple interest rate cuts by the Federal Reserve in 2024, starting from June, exerts pressure on the US Dollar, supporting gold's current trajectory. Heightened concerns about escalating tensions in the Middle East, coupled with reports of Russia developing space-based anti-satellite nuclear weapons, contribute to the overall risk tone in the market. The recent announcement of major sanctions against Russia by the US government adds to the prevailing uncertainty, influencing the safe-haven appeal of gold in these dynamic market conditions.

Technical Analysis Points to Potential Upside for Gold Price

From a technical standpoint, sustained strength above the 50-day SMA sets the stage for further recovery from the recent low of $1,984. Positive indicators on the daily chart suggest a potential move towards the $2,065 supply zone. However, downside protection lies around the $2,016-2,015 area and the 100-day SMA near $2,000. A breach of the $1,984 support could trigger bearish sentiment, with the potential to test the critical 200-day SMA support near $1,965.

Forex Traders Eye Gold Price Amidst USD Fluctuations

Forex and crypto traders closely monitor the Gold price amidst fluctuations in the US Dollar. The USD's percentage change against major currencies today shows modest weakness, contributing to gold's positive momentum. As the FOMC meeting minutes approach, traders are cautious about potential hawkish signals that could impact the USD and, consequently, the XAU/USD pair. The ongoing geopolitical developments and global economic factors reflected in the currency heat map provide valuable insights for Forex traders making strategic decisions in the current market scenario.

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