Technical Analysis

GOLD Price Analysis – March 28, 2024

By LonghornFX Technical Analysis
Mar 28, 20244 min

Daily Price Outlook

Gold price (XAU/USD) failed to stop its downward rally and remained well-offered around the $2,195 level. However, the reason for its downward trend can be attributed to the mild strength of the US dollar, which gained traction amid hawkish remarks by Fed's Waller. Another factor that has been weighing on the gold price was the risk-on market sentiment, which was supported by Federal Reserve Governor Christopher Waller's statement suggesting no rush to cut rates amid higher inflation readings. This boosted market sentiment by indicating confidence in economic strength.

In contrast to this, the geopolitical risks from the Russia-Ukraine war and conflicts in the Middle East can support the gold price by creating uncertainty and increasing demand for safe-haven assets, thereby helping to limit its losses.

Federal Reserve's Stance on Interest Rates and Gold Prices

On the US front, Federal Reserve Governor Christopher Waller stated that he is not rushing to lower interest rates despite recent inflation spikes, which strengthened the US dollar and limited gains for Gold. However, Waller also hinted that as inflation levels ease in the future, the Fed may consider implementing rate cuts later in the year. Hence, this prospect of rate cuts could increase demand for Gold.

Meanwhile, the Federal Reserve has projected that there might be three rate cuts throughout the year, which is in line with what the market expects. There's now a higher probability that the first-rate cut might happen during the June meeting of the Federal Open Market Committee (FOMC).

Moving ahead, traders are focusing on US economic calendar, which includes the final Q4 GDP figure, Weekly Initial Jobless Claims, Pending Home Sales, and the revised Michigan Consumer Sentiment Index. These indicators will be closely watched as it provide insights into the health of the US economy.

Geopolitical Tensions and Their Impact on Gold Prices

On the geopolitical front, ongoing conflicts such as the Russia-Ukraine war and tensions in the Middle East, particularly between Israel and Palestine, are expected to support the price of safe-haven assets like gold. As per the latest report, Israel's President Isaac Herzog's call for continued offensive actions against Hamas in Gaza, despite UN demands for a ceasefire, Meanwhile, statements from Israeli officials indicate a firm stance on national security issues, complicating relations with the Biden administration and raising concerns about further escalation.

Therefore, geopolitical tensions, including the Russia-Ukraine conflict and Israel-Palestine tensions, create uncertainty, prompting investors to seek safe-haven assets like gold, thus limiting potential losses in its price.

GOLD Price Chart - Source: Tradingview
GOLD Price Chart - Source: Tradingview

GOLD (XAU/USD) - Technical Analysis

Gold (XAU/USD) holds its ground, trading at $2194.79, reflecting a market at a standstill, yet underlying currents suggest potential volatility. The precious metal's journey is navigated within a web of technical indicators and pivotal price levels that offer a roadmap for future price actions. At the heart of this analysis lies the pivot point of $2187, acting as a fulcrum around which Gold's immediate future oscillates. A breach above this level could signal strength and a continuation of the uptrend, with resistance markers at $2209, $2221, and $2234 delineating potential hurdles ahead. Conversely, the establishment of support at $2176, $2168, and $2157 forms a safety net, cushioning any downside movements and maintaining the bull's domain.

Technical indicators paint a bullish picture; the 50-day Exponential Moving Average (EMA) at $2178 suggests a supportive backdrop for bullish activity. Coupled with a Relative Strength Index (RSI) of 59, the conditions seem ripe for upward momentum. Notably, the presence of bullish candles above the $2187 level further solidifies the argument for an uptrend continuation. This technical confluence beckons traders to a market ripe with opportunities, yet warrants caution due to inherent market uncertainties.

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