- The price of gold is located about a historical maximum amid geopolitical risks and growing commercial tensions.
- Fed rate cuts bets benefit the yellow metal without performance and remain favorable.
- A modest rebound of the USD limits the raw material before the crucial decision of the FOMC.
The price of gold (Xau/USD) enters a bullish consolidation phase near the historic peak while the bullies pause and choose to wait for the result of a two -day FOMC policy meeting that will take place later during the US session on Wednesday. The market consensus strongly suggests that the Federal Reserve (FED) will maintain the federal funds rate without changes in the current range of 4.25% to 4.50%. Therefore, the attention will focus on the updated economic projections and the press conference after the meeting, where the comments of the president of the Fed, Jerome Powell, will be examined in search of clues about the future path of feat cuts. This, in turn, will play a key role in influencing the dynamics of the American dollar (USD) in the short term and will provide a significant impulse to yellow metal without yield.
Looking ahead to the Central Bank’s key event, some repositioning operations help the USD recover slightly its lowest level since October reached on Tuesday and act as a wind against the price of gold. However, the negative side remains cushioned in the middle of the uncertainty about the aggressive commercial policies of the US president Donald Trump and its impact on global economic perspectives. Apart from this, the risk of a higher escalation of geopolitical tensions in the Middle East continues to act as a wind in favor for the golden shelter gold and supports the perspectives of an extension of an upward trend of several months. However, the conditions slightly overcomprated in the daily chart could stop the operators of opening new bullish bets around the Xau/USD.
What moves the market today: the bulls of the price of gold become cautious before the long -awaited decision of the Fomc
- The price of gold reached a new historical maximum, around the region of $ 3,038-3,039 on Tuesday, since the increase in tensions in the Middle East and concerns about the tariff plans of US President Donald Trump continue to feed the demand for the refuge asset.
- Israeli air attacks against Hamas objectives in Gaza have left more than 400 dead. The Israeli prime minister, Benjamin Netanyahu, said he ordered the attacks because Hamas had rejected proposals to extend the high fire that has been maintained since January.
- Trump has threatened to impose reciprocal and sectoral tariffs, which, they said, will take effect on April 2. This adds to a fixed 25% tariff on steel and aluminum since February, feeding the fears of a global commercial war.
- Operators increase their bets that the Federal Reserve will have to reduce interest rates this year more than expected in the middle of the growing possibility of an economic recession due to the aggressive Trump administration policies.
- The current market assessment indicates the possibility that Fed can reduce indebtedness costs by 25 basic points in the monetary policy meetings of June, July and October, which further supports the yellow metal that now yields.
- The US dollar experiences a modest rebound from a minimum of more than five months reached on Tuesday, since operators choose to lighten their bearish bets before the FOMC decision, which will be announced later during the US session on Wednesday.
- The Mondeary Policy Declaration that accompanies it and the comments of the president of the FED, Jerome Powell, will be examined closely in search of clues about the future path of feat cuts, which will boost the demand of the USD and will influence the XAU/USD torque.
The price of gold needs to consolidate before the next rise movement in the middle of a slightly overcompared RSI in the daily chart
The daily relative force index (RSI) is maintained above the 70th brand, suggesting slightly overcompricated conditions. Looking ahead to the Central Bank’s key event, this makes it prudent to expect some short -term consolidation or a modest setback before operators begin to position themselves for any additional appreciation movement. Meanwhile, the recent rupture and acceptance above the $ 3,000 psychological brand suggests that the road of lower resistance for the price of gold remains upwards.
Meanwhile, any corrective landslide could be seen as a purchase opportunity and remain limited near the area of ​​$ 3,005-3,000. This is followed by a support near the region of $ 2,980-2,978, which if it breaks could cause some technical sales and drag the price of gold to the area of ​​$ 2,956. The descending trajectory could extend even more towards the intermediate support of $ 2,930 before the XAU/USD eventually falls to the $ 2,900 mark on the way to the minimum of last week, around the region of $ 2,880.
FAQS GOLD
Gold has played a fundamental role in the history of mankind, since it has been widely used as a deposit of value and a half of exchange. At present, apart from its brightness and use for jewelry, precious metal is considered an active refuge, which means that it is considered a good investment in turbulent times. Gold is also considered a coverage against inflation and depreciation of currencies, since it does not depend on any specific issuer or government.
Central banks are the greatest gold holders. In their objective of supporting their currencies in turbulent times, central banks tend to diversify their reserves and buy gold to improve the perception of strength of the economy and currency. High gold reserves can be a source of trust for the solvency of a country. Central banks added 1,136 tons of gold worth 70,000 million to their reservations in 2022, according to data from the World Gold Council. It is the largest annual purchase since there are records. The central banks of emerging economies such as China, India and Türkiye are rapidly increasing their gold reserves.
Gold has a reverse correlation with the US dollar and US Treasury bonds, which are the main reserve and shelter assets. When the dollar depreciates, the price of gold tends to rise, which allows investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rebound in the stock market tends to weaken the price of gold, while mass sales in higher risk markets tend to favor precious metal.
The price of gold can move due to a wide range of factors. Geopolitical instability or fear of a deep recession can cause the price of gold to rise rapidly due to its condition of active refuge. As an asset without yield, the price of gold tends to rise when interest rates lower, while the money increases to the yellow metal. Even so, most movements depend on how the US dollar (USD) behaves, since the asset is quoted in dollars (Xau/USD). A strong dollar tends to keep the price of gold controlled, while a weakest dollar probably thrusts gold prices.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
