Are the Golden Bulls Getting Ready to Return: The Market Will Be Watching!

Gold prices are moving sideways at $1,234. Investors are waiting for the Federal Reserve's next moves. High U.S. interest rates are causing a reassessment of gold investments. Positive stocks and geopolitical risks affect the price course of gold.

The impact of U.S. monetary policy on gold prices

Market participants are adjusting their positions ahead of the upcoming Federal Reserve meeting. Amid this expectation, gold prices moved little and remained stable at $1,234. As you can see from Kriptokoin.com, the shiny metal reached its highest levels in early April. However, it later declined due to declining demand for safe havens and the expectation that US interest rates will continue to rise.

The PCE price index for March came in higher than expected at 0.3% month-on-month and 2.7% year-on-year. Recent U.S. economic data, including this one, reinforced the belief that the Fed will maintain higher interest rates for an extended period of time. Now, there is a possibility that rate cuts will be postponed until September or later. This, in turn, increases the opportunity cost of holding non-yielding assets such as gold. Despite recent declines, gold prices have been rising year-on-year on concerns that prolonged periods of high interest rates could dampen global economic growth.

As of the last trading session, gold struggled to sustain its modest gains from the previous days. Therefore, prices declined slightly at the beginning of the week. Positive stock performance and broader market sentiment, influenced by ongoing geopolitical risks such as the Russia-Ukraine conflict, continue to impact gold prices. In addition, fluctuations in the US dollar, which rebounded sharply against the Japanese yen and retreated from two-week lows, affected gold as it was inversely proportional to the strength of the dollar.

Key developments to watch:

• FOMC Meeting and U.S. Economic Data: The market is gearing up for the Fed's views on future monetary policy and key economic releases. The outcome of these discussions will likely affect the market's interest rate expectations. This, in turn, will have a significant impact on gold prices.
• Geopolitical Tensions: Ongoing conflicts and peace talks, especially between Israel and Hamas, affect market sentiment. Therefore, it is possible that this will affect the safe-haven demand for gold.
• Inflation Indicators: Persistent inflation is likely to strengthen gold's role as an inflation hedge. In addition, the price trajectory could be affected, especially if inflation remains above the Fed's target rate of 2%.

Gold prices technical outlook

Market analyst Arslan Ali evaluates the technical picture of gold. Gold prices are currently trading at $2,334.82, down a slight 0.20%. The precious metal is just above the pivot point at $2,325.66. If it can stay above this threshold, it points to potential upside momentum. The immediate resistance stands at $2,370.56, while the other hurdles stand at $2,418.45 and $2,463.94.

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