Gold will remain under pressure if investors' expectations of a rate cut aren't met

Gold prices have not shown any pronounced dynamics during last trading sessions. The price is now moving sideways. Short-term growth drivers for gold stopped affecting the market. Now only medium- and long-term drivers remain, but they are gradually receding into the background.

According to ING analysts, the U.S. central bank policy will be a key factor affecting the cost of the yellow metal in the medium term. Decrease in interest rates will support gold prices.

Now, investors expect a highly optimistic scenario of rate cuts to occur this summer. The Fed officials continue sticking to their position that the rate will be lowered only in 2024. Against the background of weakening banking crisis, investors' expectations may shift towards tightening of monetary policy. Such a scenario could accelerate a corrective movement in gold.

Nevertheless, the medium-term prospects for gold look bright. Demand for gold among physical investors grows, but it is far from peak activity. At the same time, "whales" such as central banks continue building up their positions.

CFTC data shows a significant increase in the number of long positions in gold on the COMEX in recent weeks. There may be an even greater increase if there are signs of the Fed changing its monetary policy main course.

In 2022, there was a significant outflow of funds from gold ETFs. This trend continued into early 2023, despite rising prices. However, weak demand for ETFs was offset by active purchases of the metal by central banks.

Over the past two weeks, investor interest in safe-haven assets began rising again. Central banks thus continued to increase purchases of gold.

According to the technical analysis on the hourly timeframe, gold is in a downward channel. The price is approaching its upper limit, from which one can take short positions, aiming for a decrease to the support at the bottom.

So, the downside target will be at the level of 1,955 dollars. A stop-loss will be placed at an upward exit from the trend and renewal of the local high, which corresponds to the price of 1,973 dollars.

A decrease in the price of gold:

Take profit - 1,955

Stop-loss - 1,973