Gold Price facing hurdle struggles in the wake of a Hawkish Fed
The price of gold is having a hard time going up again, even though investors are processing the news that the Federal Reserve (Fed) will increase interest rates by 25 basis points (bps) to a range of 5.25% to 5.50%.
Earlier, the value of XAU/USD rose as people in the market hoped that the rate increase in July would be the last one for this year. They thought this might make the Fed stop raising rates for a longer time.
The fears of a global recession have lessened because of positive Consumer Confidence in the US. In addition to the expectation that the Fed will announce the highest point for interest rates. A situation that has mounted pressure on the US Dollar Index (DXY). As a result, the index is going down because investors believe that Fed Chair Jerome Powell won’t be too concerned about rising inflation.
Investors are now waiting for the Fed’s policy decision on Wednesday and the US GDP numbers for the second quarter, which will be released on Thursday. This is making them nervous and uncertain.
Gold ( XAU/USD ) Price Fundamentals
The gold price has been fluctuating around $1,960.00 in anticipation of the Federal Reserve’s upcoming monetary policy decision. Most experts predict a 25 basis point (bps) increase in interest rates; bringing them to a range of 5.25% to 5.50%. However, concerns about inflationary pressures are causing some uncertainty about the guidance for the interest rate policy in September.
According to Jerome Powell’s recent statements, it seems likely that there will be another interest rate hike following the one in July. This indicates that the Federal Reserve is taking measures to control inflation and stabilize the economy.
The CME Group Fedwatch tool also supports the view that interest rates will peak at 5.25% to 5.50%. Later on, the rates will likely remain unchanged until the end of the year.
In light of these data points, it is crucial for investors to carefully analyze the market dynamics. As well as the Federal Reserve’s actions. The anticipated interest rate hike may impact the gold price, as higher interest rates can make non-interest-bearing assets like gold less attractive. On the other hand, the expectation of steady rates by year-end might provide some stability to the market.
Investors should closely monitor the Federal Reserve’s statements and actions, as well as keep an eye on inflationary trends. Any unexpected deviation from the predicted interest rate path could lead to fluctuations in the gold price.
4-hour Gold price analysis
The price of gold is getting stronger and may soon break above the resistance level of $1,970.00. This happened because investors understood that the Federal Reserve (the Fed) is likely to increase interest rates.
Gold has been consistently trading in a wide range between $1,953 and $1,968 for the last three trading sessions. The uncertainty is mainly due to not knowing exactly what the Fed’s plans are for the rest of the year.
A positive sign for gold’s price is a “bullish crossover” in the 20-day and 50-day Exponential Moving Averages (EMAs) at $1,951.00. This suggests that there could be even more strength in the upward trend of gold.
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