Gold could not stay below the level of 2000 for a long time, and buying activity took the yellow metal to the local highs of 2020-2030 once again. Meanwhile, today's results may determine the dynamics of gold prices until the beginning of May: will the main precious metal continue its way to the historical maximum of 2070 or it will consolidate near the 2000 level.
Of course, the main concern for market participants today is the U.S. consumer price index figures for March. Analysts expect a sharp slowdown in overall inflation from 6% to 5.2%, although the core figure is likely to remain at the same level of 5.5%. Considering that the Fed focuses on core inflation when making decisions to change interest rates, its high stability may disappoint bulls in the gold market.
Officials from the Fed have spoken in recent days mostly holding the view that another key rate increase of 0.25% is necessary to make at the meeting on May 3. New York Fed President John Williams, as well as his colleague from the Minneapolis Fed, Neel Kashkari, believe that it is necessary to follow the tightening of monetary policy in order to curb inflation.
It will be possible to study the Fed's position in details today, when the minutes of the March meeting of the U.S. financial regulator will be published a few hours after the inflation statistics. Majority of votes in favor to continue raising interest rates will cause the growth of the dollar and will put pressure on gold prices.
In recent weeks, the 2000 level has become the most important one for determining future gold price movements. It will take a lot of activity from the bears to break through the 2000 level from the top down, but they will definitely be able to bring the quotes to the 1990 level, at least for a short time. Next, the profits should be fixed quickly, as there were many such drawdowns that have been bought back before.
The following trading strategy option can be suggested:
Sell gold in the 2010-2015 range. Take profit 1 – 2000. Take profit 2 – 1990. Stop loss – 2025.
Also, traders may use Trailing stop instead of a fixed Stop loss at their convenience.
This content is for informational purposes only and is not intended to be investing advice.
