Daily Price Outlook
Gold (XAU/USD) is currently trading slightly lower at 1,994.30 per ounce but is still close to its highest level in a year. In the early hours of Friday, XAU/USD is struggling to maintain its two-day recovery as it oscillates between $1,991 and $1,994.
Less Hawkish Fed Underpins Gold Price
After the FOMC meeting in March on Wednesday, the price of safe-haven gold increased. This was because the US Federal Reserve (Fed) hinted that tighter credit conditions caused by financial stress could work in the Fed's favor to reduce inflation. As a result, there were speculations that the Bank would probably not need to hike rates as much as anticipated, improving market sentiments.
In addition, the Federal Reserve's chairman, Jerome Powell, said during the press conference that followed the meeting that it was likely that the Fed wouldn't need to hike rates as much as anticipated. This led to gold rising even further.
Gold increased in value because hopes of reduced interest rates are seen as bullish for the metal since it does not provide a return to investors. However, it scaled down its gains after labor market data from the US.
Strong Labor Market Figures
On Thursday, new statistics showed that the initial Jobless Claims report for the week ending March 17 indicated a lower-than-anticipated increase in the number of individuals seeking unemployment benefits. The number of claims was 191K, compared to the predicted 198K.
This suggests that the labor market is better than analysts had predicted, which may lead to increased inflation pressure and the possibility that the Fed may need to raise rates more quickly.
As a result, the benchmark 10-year Treasury note yield increased to 3.410% in line with traders' forecasts of the Fed fund rates. The Dollar Index (DXY) also rose as initial jobless claims decreased, and is now trading a little higher at 102.63.
Consequently, the XAU/USD fell after the announcement of stronger-than-expected job market statistics strengthened the dollar.
Looking ahead, it will be crucial for gold traders to pay close attention to US preliminary PMIs and durable goods orders to seek fresh momentum.
Gold (XAU/USD) Intraday Technical Levels
Pivot Point: 1987
Gold (XAU/USD) – Technical Outlook
The gold price has reached the first target of $2,000.00 and is facing strong resistance at this level. Despite showing a slight bearish bias due to stochastic negativity, it is anticipated to resume the bullish wave with the next target at $2,040.00.
In order to confirm the continuation of the bullish trend, the price must surpass the recently recorded high of $2,009.78. Failure to do so may lead to a negative formation, pushing the price back to a correctional bearish track. In such a scenario, losses are expected to begin testing $1,962.50 and extend to $1,933.20.
As long as the price remains stable above $1,962.50, the bullish trend is expected to continue in the upcoming period.
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