Daily Price Outlook
Gold (XAU/USD) is lower by 0.10%, trading at 2,003.04. The Gold prices fell as investors expected more clues on American monetary policy from several scheduled Federal Reserve speakers and publications.
Hawkish Fed Officials
James Bullard, president of the St. Louis Fed, stated that the central bank should keep tightening policy as the labor market statistics remain positive. The Fed official further says that the job market is still robust and that strong consumption reduces the likelihood of a recession in the second half of 2023.
Furthermore, Atlanta Fed Bank President Raphael Bostic stated he favors hiking interest rates one more time and then keeping them over 5% for an extended period to combat persistently rising inflation.
Worries that US interest rates might rise more than anticipated returned due to hawkish remarks from Fed officials and some positive signs of economic resiliency.
Markets Expect Clarity on Fed Rate Hikes
Recently, consumer retail demand has decreased because of rising financing prices and strict credit standards by US commercial banks. The best-case scenario is that the Fed would hold off on raising rates further and instead think about taking a break to prevent the economy from falling into a recession. However, rate hikes cannot be ruled out, given the current situation.
According to Fed Fund futures prices, the market is now pricing in an 80% likelihood of a 25 basis point increase in May and a 19% possibility of a similar move in June. However, despite increased expectations for another Fed rate hike, the US Dollar Index (DXY) is trading below 101.80. Meanwhile, the US Treasury bonds with a 10-year maturity are 3.58%.
The odds of rising interest rates are negative for the XAU/USD pair since it raises the opportunity cost of keeping non-yielding assets.
Currently, attention is on an array of signs from the Federal Reserve, including the Beige Book economic report expected later on Wednesday. The speeches by Fed Governors Lisa Cook and Christopher Waller are scheduled for Thursday and Friday, respectively.
Daily Technical Levels:
Pivot Point: 1.0959
GOLD – Technical Outlook
The gold price oscillates around 50EMA, while the stochastic indicator continues to lose its positive momentum. This maintains the possibility of a resumption of the corrective bearish wave. To confirm an extension of this bearish wave towards the $1,957.30 level, the price needs to break through the $1,992.20 mark.
As a result, we will maintain our bearish outlook for the upcoming period. However, it should be noted that if the price breaches the $2,010.00 level, this would halt the bearish correction and prompt a rally, leading to a resurgence of the primary bullish trend. Today's anticipated trading range is between $1,985.00 (support) and $2,015.00 (resistance).
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