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Fed’s dovish comments will support gold

22 March 2023 181
Fed’s dovish comments will support gold

Gold corrected after its significant rise. However, the price remains inside a bullish Marubozu candle, which was formed on Friday.

The market finally calmed down after a wave of bankruptcies. At the same time, it is worth noting that it is not a one-time event. Historically, banking problems last for about a year, therefore, similar “black swans” might be expected in the near future. This scenario is positive for gold.

The main event today is the Fed's decision and comments on the key rate.


Analysts’ consensus forecast shows a 25-basis-point rate hike. However, the Fed’s comments will be of more importance, as they are likely to demonstrate a dovish pivot.

Standard Chartered also forecast rate hikes by 25 basis points at the Fed meeting on Wednesday. However, gold might again reach the level of $2,000 per ounce even after monetary policy tightening.


According to the bank, growing risks of a recession support gold prices. At the same time, demand for safe-haven assets should remain high in order for the cost of the yellow metal to hit $2,000 per ounce.

ANZ analysts believe that the Fed’s decision eventually will have a positive impact on precious metals. TD Securities experts also see gold’s potential to rise to $2,045 per ounce under certain conditions. According to them, inflows of new investors and high demand will keep the prices from a serious fall.


As the technical analysis shows, gold remains in a range of bullish rally resumption. The chances of the rally will drop significantly if the price of the precious metal is lower than the bullish Marubozu candle at $1,915. Also, a strong support was formed at the same level this January. The price is often mentioned in analysts’ forecasts, as it is a round level and a psychological barrier for gold.

Thus, the growth target will be the level of $2,000. The Stop-loss might be set when declining to $1,915.

 

Gold prices are likely to rise:

Take profit – 2,000

Stop-loss – 1,915

This content is for informational purposes only and is not intended to be investing advice.

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