Gold prices are falling below $2000 today. Market participants are monitoring the US Federal Reserve's (Fed) economic report. Hawkish comments from the central bank officials have raised fears of excessive rate hikes. However, news of higher inflation in the UK had the most negative impact on gold.
The UK inflation rate remained consistently high in March. This is another unexpected reason for a further interest rate hike by the Bank of England.
The consumer price index rose by 10.1% year-on-year. The increase was driven by the strongest rise in food prices in more than four decades, the Office for National Statistics said on Wednesday. Economists had expected the growth rate to slow down to 9.8%.
Inflation in the UK has remained at a higher level than prices in the US and Europe, where the CPI has been drifting downward for months.
Analysts at Swiss MKS PAMP, which specializes in precious metals, have assessed important upside and downside targets for the gold price. A rise above the $2070–2075 range is important for the metal's growth. These are the highs of 2020 and 2022. According to forecasts, the national debt will almost double by 2050, that puts the model implied gold price at $3500.
Gold dropping to the range of $1780–1800 would cause concern among market participants. The minimum price of gold is estimated at the level of $1560–1600 where the current uptrend started.
Analysts give various predictions regarding the gold's prospects, so one can't rule out a possibility of a decline in its prices.
According to technical analysis, gold is breaking down the uptrend. The nearest correction target will be the price of $1950. This is the nearest Fibonacci level, as well as the previous price peak. A Stop loss could be placed in case of a return to the uptrend and an update of the last session highs at the level of $2020.
A decline in the gold price:
Take profit – 1950
Stop-loss – 2020
This content is for informational purposes only and is not intended to be investing advice.