The price of gold rose to $1900 after the revision of the Fed rate
Gold prices are rising for the fourth day in a row as US Treasury yields fall in response to the US dollar weekend.
The precious metal hit a new 5-week high due to a broad sell-off in the US dollar as the aftermath of the Silicon Valley banking collapse revives betting on a more dovish stance by the Federal Reserve.
The United States said it would pay off the SVB deposits in full, greatly allaying contagion concerns. However, the Fed rates have also been cut, with Goldman Sachs dropping expectations for a March rate hike, while JP Morgan expects a 25 basis point hike.
A slower pace of rate hikes will give the US central bank more time to assess the impact of a historically fast pace of rate hikes on the economy. Treasury yields are falling fast, with 2-year yields down 18 basis points to 4.34%, the biggest drop in 3-day bonds in more than 35 years.
The Fed is now entering a period of radio silence ahead of next week’s FOMC meeting, when markets were estimating a 50 basis point rise in the middle of last week.
The next important catalyst will be the US inflation data published tomorrow, which may be the bears’ last hope in the gold market. A higher-than-expected inflation print could push for higher rates, but a slowdown in inflation could boost non-performing gold.
What’s next for gold prices?
The price of gold broke out of the symmetrical triangle and rose to 1894, a 5-week high. However, he was unable to hold the price and returned to the support of the SMA-50 moving average. A decisive break above the SMA-50 along with a bullish RSI keeps the bulls hopeful for further gains. A rise above 1894 may open the door to a rise above the psychological level of 1900.
Source: StoneX, Tradingview
Meanwhile, the bears may focus on the long upper wick, suggesting there was little demand at the higher price. Failing to close above the 50-day moving average, the bears can look to declining trendline support at 1846 to re-enter the triangle. A break below 1814 is needed to break the triangle down.
Fiona Chincotta, FOREX.com » Official site
Fiona has a deep understanding of the fundamentals of the market, gained from her 15 years of experience in the financial markets. It provides analysis and up-to-date information on financial markets as well as the economy and monetary policy in the UK, US, Europe and Asia. Her name is regularly quoted in the global financial press, her name appears frequently in the Financial Times, The Telegraph, Reuters and Bloomberg.
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