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Gold Price Forecast: XAU/USD Steady Near $2,032 as Fed Signals Patience; Buy Now?
Arslan Butt•Monday, February 26, 2024•2 min read
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In the latest market analysis, Gold’s (XAU/USD) prices edged higher to $2,032, breaking a three-week stalemate amid prolonged geopolitical strains and a recent dip in the US Dollar (USD).
Expectations for an imminent Fed rate reduction have been recalibrated in light of US consumer and producer prices exceeding forecasts.
The narrative is reinforced by the minutes from the Federal Open Market Committee’s (FOMC) January meeting and subsequent hawkish commentary from Fed officials, emphasizing a methodical approach towards rate adjustments given the current inflationary landscape and a robust US economy.
Yield Dynamics and Gold’s Valuation
With these developments, US Treasury bond yields have maintained support for the USD, thus creating headwinds for Gold, a non-yielding asset.
Nonetheless, potential escalations in the Middle East and the ongoing Russia-Ukraine conflict present a backdrop that could curtail Gold’s downside, as these factors traditionally boost demand for safe-haven assets.
Market Sentiment and Geopolitical Risks
The Gold market reflects a tug-of-war between delayed Fed rate cut expectations and geopolitical uncertainties that underpin safe-haven demand.
While the Fed’s minutes suggest a cautious pause before rate reductions, comments from leading Fed members indicate that immediate rate cuts are unlikely, with the central bank’s long-term inflation target as a key focus.
Looking ahead, the market’s attention shifts to upcoming US economic data. Notably, the New Home Sales figures, expected to be 680K, will be a critical point of focus, potentially influencing the USD’s strength and, consequently, Gold price movements.
Investors will keenly observe these indicators for insights into the Fed’s impending policy decisions.
Gold Price Forecast: Technical Outlook
On the GOLD daily chart, the pivot point is established at $2,027.13, with immediate resistance forming at $2,041.30. Further resistances are found at $2,053.29 and $2,065.71, delineating potential upper barriers.
On the flip side, support levels are identified at $2,015.06, followed by stronger foundations at $2,001.46 and $1,988.19.
The Relative Strength Index (RSI) stands at 57, indicating a neutral momentum, while the 50-Day Exponential Moving Average (EMA) at $2,022.65 suggests an inclination towards an uptrend.
The prevailing price pattern suggests that Gold maintains a bullish outlook above the $2,020 threshold, with a break below this level potentially reversing the trend.