. Gold Prices Near All-Time Highs: What's Next?

Gold Prices Near All-Time Highs: What’s Next?

05 Mar 2024

Gold prices sit close to record highs with anticipation building for further signals on interest rates.

FUNDAMENTAL OVERVIEW:

In Asian trading on Tuesday, gold prices showed minimal movement, staying close to all-time highs. The uncertainty surrounding the global economy and expectations of potential early interest rate cuts contributed to a significant surge in gold values.

However, the current surge seems to have temporarily halted, awaiting additional cues from the U.S. economy, especially comments from the Federal Reserve and crucial labor market data scheduled for later in the week.

Indications of a slowdown in the U.S. economy spurred increased interest in the precious metal. Additionally, concerns about a recession in Europe and Japan, combined with less-than-robust growth predictions in China, contributed to the demand for safe-haven assets.

Yet, additional advances in gold were constrained by the expectation of further signals on U.S. interest rates, especially with Federal Reserve Chair Jerome Powell scheduled to provide insights later this week.

Scheduled to appear before Congress on Wednesday, Powell is anticipated to uphold his largely hawkish stance, as predicted by analysts.

Following Powell’s testimony, Friday’s upcoming nonfarm payrolls data is poised to offer additional insights into the labor market—a pivotal factor for the Fed in its decision-making on interest rates.

Elevated U.S. interest rates persist as a significant risk factor for gold prices, constraining the precious metal from reaching record highs. Increased rates exert pressure on gold, raising the opportunity cost of investing in this commodity.

GOLD TECHNICAL ANALYSIS DAILY CHART:

Technical Overview:

Gold is trading within an up channel.

Gold is positioned above all the Moving Averages (SMA).

The Relative Strength Index (RSI) is in the overbought zone, while the Stochastic oscillator suggests a Neutral trend.

Immediate Resistance level: 2127.09

Immediate support level: 2109.53

HOW TO TRADE GOLD

Following an initial upward movement, gold entered a consolidation phase before breaking out to the upside, resulting in a significant price surge. Currently trading near a resistance zone, there is a likelihood of a corrective move after the sharp ascent, presenting a potential buying opportunity on subsequent dips.

TRADE SUGGESTION- LIMIT BUY– 2090.81, TAKE PROFIT AT- 2120.74, SL AT- 2072.35.