Uncertainties increase the attractiveness of gold due to diminishing returns. Today’s gold movements are in stabilization mode. This is due to falling interest rates (due to US banking problems).
Today, the Federal Reserve will raise interest rates by 25 percent.
An unexpected decision by the Federal Reserve to hold interest rates could indicate a banking crisis, causing a rise in the value of gold. However, the interest rate hike in June may reduce the appeal of gold as an asset with no yield.
U.S. job openings fell in March and layoffs hit their highest level in more than two years, indicating a potential weakening in the labor market, according to data on Tuesday. If uncertainty about the banking crisis and fears of a US default continue, the dollar is likely to fall, leading to a rise in gold.
On the same day, leading Senate Republicans asked President Joe Biden to either accept their party’s debt ceiling proposal or come up with an alternative. At the same time, a top Democrat hinted at trying to pass a debt ceiling increase next week.
Today’s data can also affect gold movements in the short term.
In my opinion, the Federal Reserve cannot ignore inflation at high levels and will not give a signal about stopping interest rates.
From a technical point of view, range movements mean buying at the bottom of the rectangle pattern and selling at the top of the pattern. Currently, the rectangle pattern has broken upwards in the range between 2012 and 1980.
I believe the Fed will be a bit hawkish today and put pressure on gold, but the price of gold is in bullish territory. And this prevents me from entering a sell trade. The 1999.33 support level will be very strong support for the daily candle.
If Powell’s message was inclined to dovish, for example, “if necessary, we will have a pause in interest rates in the coming months”, in this case, the broad upward trend of gold will be confirmed, and in the coming days, we can move on an upward wave.
Leave a Reply
You must be logged in to post a comment.