Gold rebounded over the past few hours amid the weakening of the dollar. However, the metal continues to be in a technically bearish zone. According to market participants’ expectations, the Fed will raise rates by 25 basis points next week. The regulator's forecast on further rate dynamics will be awaited. Gold might reduce its volatility in the absence of news before the Fed meeting, so the current movement will be considered within the hour timeframe.
According to the World Gold Council (WGC) report, the Central bank of Russia reduced its gold reserves by 3.1 tons in March, as the precious metal began a major rally. The regulator also released data on its gold reserves for February 2022. As a result, Russian reserves of the yellow metal increased by 28 tons.
These are the first hints at reducing gold in central bank reserves. Of course, it might be a single case and further purchases will happen, but this first sale might negatively affect gold prices.
India’s demand for the yellow metal is beginning to fade due to high prices.
India is responsible for 20% of global demand for gold jewelry, bullion and coins. However, all of these products are mostly imported from Switzerland and the United Arab Emirates.
Demand will remain weak from April to June, if the prices do not decline by at least 5–10%. At the same time, sales in volume terms are already falling compared with 2022. Ashish Pethe, former Chairman of the All India Gem & Jewellery Domestic Council, expects peak sales in April and May due to the ongoing wedding season. However, hot temperatures raise concerns, as people avoid going out and visiting jewelry stores during the day.
According to the technical analysis, gold is in a downward channel on the hour timeframe. The prices now are close to the upper limit of the trend, so it is advisable to open short positions. The downside target is at the lower limit of the channel and near the local minimums, which is equivalent to the price of $1,971. A Stop-loss will be set at reaching $2,013, which will signal a break through the upper limit of the trend.
Gold prices are likely to decline:
Take profit – 1,971
Stop-loss – 2,013
This content is for informational purposes only and is not intended to be investing advice.