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Gold Prices Forecast: Anticipation Builds Ahead of Fed Meeting Minutes

By:
James Hyerczyk
Published: Feb 21, 2024, 11:49 UTC

Key Points:

  • Gold trading higher awaiting Federal Reserve meeting insights
  • Fed minutes to reveal pivotal cues for gold's future movement
  • Treasury yields stability crucial for gold's current valuation
Gold Prices Forecast

In this article:

Gold is trading higher on Wednesday, as traders eagerly await the Federal Reserve’s January meeting minutes for insights into future monetary policy.

At 11:34 GMT, XAU/USD is at $2028.11, up $3.70 or +0.18%.

Fed Minutes’ Influence on Gold

The eagerly anticipated release of the Fed minutes at 19:00 GMT is crucial for gold traders, offering potential clues about the timing and nature of the year’s first FOMC rate hike. This comes amidst a backdrop of fluctuating Treasury yields and a slightly stronger U.S. Dollar. On the technical front, gold faces resistance in the zone between $2024.92 and $2034.50, with the 50-day moving average at $2031.63 being a pivotal point.

Treasury Yields and Gold’s Response

The behavior of Treasury yields, currently stable, plays a vital role in gold’s valuation. Generally, lower yields make gold a more attractive investment by reducing the opportunity cost of holding non-yielding assets. However, a surge in yields following the Fed’s hints at delayed or fewer rate cuts could diminish gold’s appeal.

Short-Term Forecast

  • Bullish Scenario: If the Fed minutes suggest a more accommodating stance with earlier or additional rate cuts, gold could see an upward surge. This potential rise could be amplified by ongoing geopolitical tensions and a softening dollar, potentially pushing gold above the $2034.50 resistance.
  • Bearish Scenario: Conversely, if the Fed indicates a less accommodative approach or hints at postponing rate cuts, gold may trend downwards. Such an outcome could bolster the dollar and lift yields, testing gold’s support level at $2024.92.

In conclusion, gold’s short-term price movements will be largely dictated by the Fed’s monetary policy indications, alongside global economic conditions and geopolitical developments. Traders should remain vigilant to these influencing factors for informed trading decisions.

Technical Analysis

Daily Gold (XAU/USD)

Gold (XAU/USD) is currently testing a key area on the daily chart, which should determine its near-term direction. Not only is the market testing its intermediate trend indicator, but it’s also inside its short-term retracement zone at $2024.92 to $2034.50, an area that could attract some selling pressure.

As far as the intermediate trend is concerned, that will be determined by trader reaction to the 50-day moving average at $2031.63.

A sustained move over $2031.63 will put the market in a position to test Fibonacci resistance at $2034.50. This is a potential launching point for an extended rally into the static resistance at $2067.00.

A failure to overcome $2031.63 will signal the return of sellers. This could lead to a test of the 50% level at $2024.92. A failure at this level will be a sign of weakness with static support at $2009.00 the next major downside target.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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