Gold rallied to $2032 per ounce as the gains of the US dollar paused, with the upcoming Federal Reserve meeting minutes and global tensions shaping the direction of gold. The resistance level of $2032 per ounce has been reached, and the reaction from the American event today will determine the fate of further gold gains.
Recently, gold prices showed flexibility and stability despite the rise in the US dollar and Treasury bond yields. Investors are eagerly awaiting insights from the minutes of the US Federal Reserve’s latest monetary policy meeting while remaining on alert for evidence of potential adjustments to US interest rates. There is a concern that US dollar-denominated gold might become less attractive to international investors given the updates from the Federal Reserve.
City Index’s chief analyst, Matt Simpson, pointed to the subdued market volatility across the US extended weekend and the lack of impactful news. He noted that while expectations for insights from the FOMC meeting are tempered, gold markets may continue to be primarily affected by technical factors in the short term.
The upcoming Federal Open Market Committee (FOMC) meeting’s minutes are expected to be of potential importance to market sentiment and gold price dynamics. Despite progress in US inflation, there is continued talk of the need for price stability, as it is crucial to weigh further political considerations. Data from the previous week also revealed higher-than-expected consumer and producer prices in the US, which reduces expectations for a rate cut in March.
The performance on the daily chart indicates the upward rebound of gold, with a potential move towards the resistance levels of $2055 and $2070 per ounce. It is recommended to buy gold from every falling level, given the support from global geopolitical tensions and the increase in central bank purchases of gold.
Additional insight:
Gold has historically been seen as a safe-haven asset, typically gaining value during times of political and economic uncertainty. With ongoing global geopolitical tensions, including developments in Ukraine, Russia, and China, and the possibility of rising interest rates in the US, there is likely to be continued interest in gold as an investment option. This combination of factors may contribute to the upward trajectory of gold prices.
