. Gold hits one-year high on Fed rate hike halt - 05 April 2023

Gold hits one-year high on Fed rate hike halt – 05 April 2023

Gold hits one-year high on Fed rate hike halt – 05 April 2023

05 Apr 2023

Gold renews a one-year high near $2,030.

FUNDAMENTAL OVERVIEW

The price of gold has continued to rise, reaching close to $2,030 on Wednesday, its highest level in a year. Following the disappointing employment figures, the 10-year US Treasury bond yield is down 1% on the day at around 3.3%, which helps XAU/USD advance of the ISM Services PMI report.

During the first part of the European trading session, the gold price is seen consolidating recent gains to reach its highest level since March 2022. As of right now, the XAU/USD is trading just above the $2,020 mark, and it appears ready to continue this week’s robust rise from the $1,950 region.

The price of gold is supported by anticipation of a halt in future Fed rate hikes.

The likelihood that the Federal Reserve (Fed) will stop raising interest rates to combat inflation is increasing, which supports the bullish prognosis for the non-yielding gold price. In actuality, the markets are currently pricing in a 25-bps lift-off at the upcoming Federal Open Market Committee (FOMC) meeting in May as well as the potential for rate drops by the end of December. The bets were confirmed by Tuesday’s weaker macroeconomic data from the United States (US), which showed that employment openings fell to their lowest level in almost two years in February.

Rising recession threats also help the safe-haven currency. XAU/USD

This was regarded as the first indication that the Federal Reserve’s attempts to cool the labor market may be having an effect. In addition, the dismal US Factory Orders data raised expectations for a soon-to-come halt in the rate-hiking cycle by pointing to slowing economic growth. This, in turn, curbs investors’ desire for riskier investments, as evidenced by a typically softer tone surrounding the equity markets, and it also helps fuel some haven flows toward the price of gold. Nevertheless, the XAU/USD faces resistance from a slight strengthening of the US Dollar (USD).

Gains are capped by rising US bond yields and a slight US Dollar strength.

After falling overnight, US Treasury bond yields start to rise, helping the dollar to recover from this Wednesday’s bottom, which was the lowest since early February. In turn, this is preventing bulls from making aggressive wagers on the price of gold expressed in US Dollars. Before positioning for further gains, traders should exercise caution because they appear reluctant and prefer to stay on the sidelines ahead of the release of the closely watched US monthly job details, commonly referred to as the NFP report, on Friday.

GOLD TECHNICAL ANALYSIS DAILY CHART:

Technical Overview

Gold is currently trading in up channel.

Gold is currently trading above all SMA.

RSI is in buying zone which suggests bullishness and Stochastic is suggesting an up trend.

Gold resistance is at 2025.02 & its immediate support level is 2018.96

HOW TO TRADE GOLD

Gold has broken its previous day’s high and is presently trading in an upward range. Remain positive on it because it will continue to trade higher until any reversal. 

TRADE SUGGESTION- BUY AT 2025.21 TAKE PROFIT AT 2034.64, SL AT 2019.40