Blog Details

  • Home
  • -
  • Blog Details

Mar 13
2024

Gold price struggles to lure buyers amid uncertainty over the pace of Fed rate cuts

Gold price trades with a mild positive bias through the first half of the European session on Tuesday, albeit lacks follow-through and remains close to the weekly low, around the $2,150 area touched the previous day.

Technical Overview

From a technical perspective, the overnight swing low, around the $2,150 area, now seems to protect the immediate downside. Against the backdrop of the overbought Relative Strength Index (RSI) on the daily chart, a convincing break below might prompt some technical selling and drag the Gold price to the next relevant support near the $2,128-2,127 zone. The subsequent slide might expose the $2,100 round figure, which should act as a strong base for the XAU/USD and a key pivotal point for short-term traders.

On the flip side, any further move up is likely to face some resistance around the $2,174-2,175 region ahead of the $2,195 area, or the record peak touched last Friday. Some follow-through buying beyond the $2,200 mark will push the Gold Price to the uncharted territory and set the stage for the resumption of the recent blowout rally witnessed over the past two weeks or so.

 

Fundamental Overview

Gold price (XAU/USD) trades with a mild positive bias through the first half of the European session on Tuesday, albeit lacks follow-through and remains close to the weekly low, around the $2,150 area touched the previous day. The uncertainty over the Federal Reserve's (Fed) rate-cut path turns out to be a key factor that is holding back traders from placing fresh directional bets around the non-yielding yellow metal. Meanwhile, the warmer-than-expected US consumer inflation data on Tuesday fuelled speculations that the Fed might stick to its higher for longer narrative in the near term. This, along with the underlying strong bullish sentiment across the global equity markets, acts as a headwind for the precious metal. 

The markets, however, are still pricing in a greater chance that the US central bank will start cutting interest rates in June. This is reinforced by a softer tone around the US Treasury bond yields, which keeps the US Dollar (USD) bulls on the defensive and acts as a tailwind for the Gold price. Traders also seem reluctant and might prefer to wait on the sidelines ahead of the highly-anticipated two-day FOMC meeting starting next Tuesday. In the meantime, traders will take cues from the release of the US Retail Sales and the Producer Price Index (PPI) on Thursday. Nevertheless, the fundamental backdrop makes it prudent to wait for strong follow-through buying before positioning for the resumption of a two-week-old uptrend. 

Recent Blogs


Login Register