Gold prices have been exposed to further downside, with the potential of reaching near $1,800.00, due to bets on hawkish Federal Reserve activity. The US Dollar Index (DXY) is showing signs of reversal as the Fed is expected to continue its policy tightening. Gold prices have already shifted below the 38.2% Fibonacci retracement at $1,829.45.
The Federal Reserve is leaning towards reaching the terminal rate as soon as possible, due to a strong labor market in the United States and the potential for the Consumer Price Index (CPI) to increase. As a result, the US Dollar Index (DXY) has reversed after a corrective move to near 104.15, and this has exposed the Gold price to further downside momentum.
The S&P500 futures have recovered, as investors believe that the US economy is not exposed to recession fears. This is due to the steady economic outlook, retail demand and labor needs. On the other hand, the 10-year US Treasury yields have dropped below 3.90%. Additionally, the number of people filing for jobless claims for the first time dropped to 192K, signaling that the labor market is tight and consumer spending will remain robust.
Economists at TD Securities expect 25 bps rate hikes in March and May, with the Fed settling on a terminal Fed funds target rate range of 5.00%-5.25% by May. This implies that the Fed chair Jerome Powell will keep higher rates for a longer period.
The technical analysis of the Gold price shows that it has comfortably shifted below the 38.2% Fibonacci retracement (placed from November 3 low at $1,616.69 to February 2 high at $1.959.71) at $1,829.45 on a four-hour scale. The precious metal is expected to display more weakness below the immediate support at $1,819.00. The 50-period Exponential Moving Average (EMA) at $1,840.00 is acting as resistance for the Gold price. The Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which indicates more weakness ahead.
Gold prices have been exposed to further downside, with the potential of reaching near $1,800.00, due to bets on hawkish Federal Reserve activity. The US Dollar Index (DXY) is showing signs of reversal as the Fed is expected to continue its policy tightening. The Federal Reserve is leaning towards reaching the terminal rate as soon as possible, due to a strong labor market in the United States and the potential for the Consumer Price Index (CPI) to increase.
The S&P500 futures have recovered, as investors believe that the US economy is not exposed to recession fears. This is due to the steady economic outlook, retail demand and labor needs. The number of people filing for jobless claims for the first time dropped to 192K, signaling that the labor market is tight and consumer spending will remain robust.
Economists at TD Securities expect 25 bps rate hikes in March and May, with the Fed settling on a terminal Fed funds target rate range of 5.00%-5.25% by May. This implies that the Fed chair Jerome Powell will keep higher rates for a longer period. The technical analysis of the Gold price shows that it has comfortably shifted below the 38.2% Fibonacci retracement at $1,829.45 on a four-hour scale.
The 50-period Exponential Moving Average (EMA) at $1,840.00 is acting as resistance for the Gold price. The Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which indicates more weakness ahead. This suggests that the Gold price is exposed for further downside to near $1,800.00 amid hawkish Fed bets.
The US Dollar Index (DXY) is showing signs of reversal after a corrective move to near 104.15 as the Fed is expected to continue its policy tightening spell to achieve price stability. This has exposed the Gold price to continue its downside momentum to near the round-level support of $1.800.00.
The 10-year US Treasury yields have dropped below 3.90%, which has further helped to increase the downside pressure on Gold prices. The immediate support at $1,819.00 is expected to be tested in the near-term.
In conclusion, Gold prices have been exposed to further downside, with the potential of reaching near $1,800.00, due to bets on hawkish Federal Reserve activity. The US Dollar Index (DXY) is showing signs of reversal as the Fed is expected to continue its policy tightening. The Federal Reserve is leaning towards reaching the terminal rate as soon as possible, due to a strong labor market in the United States and the potential for the Consumer Price Index (CPI) to increase. The technical analysis of the Gold price shows that it has comfortably shifted below the 38.2% Fibonacci retracement at $1,829.45 on a four-hour scale, and the Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which indicates more weakness ahead. This suggests that the Gold price is exposed for further downside to near $1,800.00 amid hawkish Fed bets. The 10-year US Treasury yields have dropped below 3.90%, which has further helped to increase the downside pressure on Gold prices. Therefore, Gold prices are expected to remain under pressure in the near-term.
