Gold Hits $2025 Amid Increased Safe Haven Appeal as Middle East Tensions Stir Market
Arslan Butt•Monday, January 29, 2024•2 min read
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Inflation Metrics Weigh on Fed’s Rate Strategy
The U.S. Commerce Department’s recent release portrayed a nuanced picture of inflation. December’s Personal Consumption Expenditures Price Index (PCE) indicated a 0.2% month-over-month increase, with an annual climb of 2.6%.
The pivotal core PCE, which strips out volatile food and energy costs, ascended by 2.9% over the year—its most tempered pace since March of the previous year, trailing behind November’s 3.2% increment. These figures could serve as a crucial pivot for the Federal Reserve’s forthcoming rate deliberations.
Market Projections and the Federal Reserve’s Stability
Market prognosticators are bracing for the Federal Reserve to maintain the status quo on interest rates. However, the post-meeting press conference is eagerly awaited, as it may offer additional insights into the Fed’s future policy directions.
A hint from Fed Chairman Jerome Powell regarding a potential rate reduction in March could translate into downward pressure on the U.S. dollar.
The recent drone strike incident in northeastern Jordan, which inflicted casualties upon U.S. troops, has only intensified the call for secure investments, potentially escalating gold’s appeal as a safe-haven asset.
FOMC and BoE Meetings: The Week’s Crucial Events
The week ahead promises significant events that could dictate gold’s trajectory, with the FOMC gathering taking precedence, followed closely by the Bank of England’s (BoE) interest rate decision on Thursday. These pivotal meetings are poised to offer a clearer path for gold’s valuation in the coming days.
Gold Technical Outlook
[Gold] prices exhibit a consolidating pattern, characterized by a symmetrical triangle on the 4-hour chart, suggesting indecision among traders.
The pivot point, which the green line indicates is at roughly $2025, serves as a gauge for current market sentiment as gold floats in a constrained trading range between $2040 and $2020.
The precious metal faces a trio of resistance levels at $2044, $2050, and $2052, any of which could act as a ceiling, halting bullish momentum.
Conversely, support levels are below the pivot points at $2023, $2015, and $2009, which could provide a floor for price drops.
Because the symmetrical triangle formation is relatively balanced and the support and resistance levels are close to the pivot, this means that gold traders are ready for a breakout. This could cause the commodity to make big moves outside of this narrow band.
Gold XAU Live Chart
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ABOUT THE AUTHOR
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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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