GOLD Price Analysis – March 31, 2023
Daily Price Outlook
Gold (XAU/USD) is trading at 1,982.13, up by 0.09% in 24 hours. Gold prices sharply gained after the weak final GDP report put pressure on the US dollar and hopes of interest rate cuts boosted demand for the safe-haven metal.
Fed to Pause Rate Hikes
Jerome Powell, the chairman of the Federal Reserve, joins three other Fed officials in supporting more rate increases on Thursday, emphasizing the need to control inflation concerns. Nevertheless, mixed US data raises doubts about the Fed's hawkish tone.
According to US statistics released on Thursday, the number of jobless claims increased last week to 198K from the predicted 196K, signaling a sluggish job market. Moreover, Q4 GDP growth was somewhat lower at 2.6% compared to prior projections of 2.7%. The data points to the need for a softer Fed stance.
Furthermore, according to the Fedwatch tool from CME Group, expectations for a Fed pause or a 25 bps rate increase in May are nearly evenly split, with 47.9% of respondents favoring no change in interest rates. The US Dollar Basket (DXY), a measure of USD performance, decreased to 102.17 as markets continued to reduce the likelihood of more rate increases.
XAU/USD has been boosted by a lower US Dollar and forecasts for a decline in interest rates.
Looking ahead, the Fed's preferred inflation indicator, the February reading of personal consumption expenditures (PCE), will be revealed on Friday and might influence the price of gold.
Easing Banking Crisis Fears
The banking system remains sound, despite being under strain, according to US Treasury Secretary Janet Yellen, who made the statement on Thursday. It has helped to push back problems in the banking industry.
Nevertheless, the mixed data and risk-on mood fail to support US 10-year Treasury bond rates, which stay pressured above 3.55%, while the two-year counterpart pushes higher around 4.13%, aiming for the first weekly gain in four weeks.
As a result, the market's mixed data and generally upbeat sentiment, with lessening concerns about bank upheaval, have pushed the XAU/USD price to remain stronger.
Gold (XAU/USD) Intraday Technical Levels
Support Resistance
1962 1991
1944 2002
1933 2020
Pivot Point: 1973
Gold (XAU/USD) – Technical Outlook
Gold price's recent movements have been constrained within a symmetrical triangle visible on the chart. A break above the $1,992.00 resistance would offer a positive boost, reinforcing expectations for the continuation of the primary bullish trend. The targets for this trend begin at $2,000.00 and extend to $2,040.00 once the previous level is surpassed.
Hence, the bullish trend scenario remains in play, backed by the EMA50 that supports the price from below. It is important to note that breaking below $1,962.50 would halt the bullish wave, causing the price to experience a new bearish correction. The anticipated trading range for today lies between the $1,965.00 support and $2,000.00 resistance.
Related:
* USD/JPY Price Analysis – March 31, 2023
GOLD Price Analysis – March 08, 2023
Daily Price Outlook
The price of gold (XAU/USD) has been continuously dropping with no signs of an impending reversal. It is currently trading around the $1,812 level, indicating that sellers are willing to part with gold at that price.
This decrease in gold prices is attributed to the recent remarks made by Federal Reserve Chair Jerome Powell, which were deemed "hawkish." This suggests a more aggressive approach to monetary policy in order to combat inflation.
As a result, investors have redirected their attention to other investments such as stocks, which offer potentially higher returns. Additionally, the bullish bias of the US dollar, fueled by the Fed's hawkish stance, is also seen as a major factor that is exerting further downward pressure on gold prices.
Typically, gold and the US dollar have a negative correlation, meaning that when the value of the US dollar increases, the price of gold tends to decrease, and vice versa.
US Dollar Jumps on Powell's Remarks
On Wednesday, the US dollar gained significant support and reached a three-month high against a range of currencies. This was due to the surge in Treasury yields following Federal Reserve Chair Jerome Powell's suggestion that interest rates are likely to climb faster than what the market had forecasted.
Powell stated that the recent release of strong economic statistics would likely result in higher interest rates than previously anticipated to combat inflation.
Investors perceived this as a more aggressive monetary policy approach, leading to speculations of a 50 basis point interest rate hike in March instead of the previously predicted 25 basis point increase. CME Group's interest-rate futures show the market-implied probability of a 50 bps raise at the FOMC meeting in March increased from around 30% to 50%.
Therefore, the increase in the value of the US dollar had a significant adverse effect on the price of gold. This is due to the negative correlation between gold and the US dollar, which means that when the value of the US dollar rises, the price of gold tends to fall, and vice versa.
Gold (XAU/USD) Intraday Technical Levels
Support Resistance
1825 1846
1813 1856
1803 1868
Pivot Point: 1835
Gold (XAU/USD) – Technical Outlook
Yesterday, the price of gold experienced a significant decline, breaking below the key level of $1828.70 and closing the daily candlestick below it. This has once again put the price under bearish pressure, with a potential target of $1788.20.
The bearish channel is guiding this downward trend, and the EMA50 is providing additional downward pressure on the price.
Although the Stochastic indicator is currently showing some positive momentum, it is not expected to significantly slow down the bearish wave. Unless the price can rally to break above $1828.70, followed by $1848.00 and maintain levels above them, the bias for today remains bearish. For today's trading, the expected range is between support at $1790.00 and resistance at $1825.00.