Gold prices soared nearly 10 points on Monday after trading on the back foot last week due to the Red Sea tensions. The geopolitical tension is now coming to a close as the conflict is being resolved without being escalated. If the tensions in the Red Sea continued this week, it could reflect in the U.S. stock market with lasting implications. However, the situation is now cooling down and gold prices could be gearing up for an upward trajectory. Additionally, the Feds also plan to keep interest rates unchanged for the fourth consecutive time, causing gold prices to rise.
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Gold Prices Bounce Back As Feds Plan To Pause Interest Rates
The XAU/USD charts show gold prices hovering towards the $2,030 mark on Monday. That’s a spike of close to 0.50% after a week of being in a tailspin. If gold prices maintain the momentum, the next target for the precious metal could be the $2,050 level.
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However, there is no guarantee that the Feds will keep interest rates unchanged. CME FedWatch Tool reported that investors believe the Feds will keep interest rates unchanged for the fourth time.
The main focus now remains on the Feds’ upcoming decision about interest rate hikes that could impact the gold prices. In addition, labor market and Manufacturing PMI data remain in the spotlight which could change the direction of gold prices. Therefore, the XAU/USD indices could experience high volatility this week making gold remain elastic.
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Read here for a realistic price prediction on how high gold could reach this year in 2024. The markets are recovering this week after the US dollar index (DXY) rebounded from a low of 101 points to 103.80. However, a stronger US dollar spells doom for gold as the XAU/USD slips if the USD performs well.