Yesterday gold quotes showed a strong growth by more than 1.5% and reached the 2015 level for the first time since the middle of April. Gold was in a consolidation during the second half of last month and it finished with a strong upward impulse, which increases the probability of further price increases. In case this evening's events are positive for the precious metals market, gold should at least break the yearly highs near 2040-2045.
The main factor that will determine the future dynamics of financial markets will be today's Fed meeting. The level of interest rates is almost clear: investors are expecting another 0.25% increase to the range of 5-5.25%. It is often more interesting to watch Jerome Powell's press conference, where the chairman of the U.S. Central Bank will announce the future prospects of the monetary policy.
With more than 80% probability, today's Fed interest rate hike should be the last, and there will be no change in monetary policy at the next meeting on June 14. If the comments by Powell and his colleagues coincide with the current market expectations, gold has all chances to continue yesterday upward trend.
More and more data on the U.S. economy supports the ending of the interest rate hike cycle. Yesterday the statistics on the number of open jobs in the labor market for April was presented, and it showed a drop to less than 9.6 million. This is the lowest value of the vacancies since June 2021. The worsening recession in hiring may just be the determining factor in favor of unchanging Fed policy in the next month.
Support of 1980 has shown its high resistance. On the rebound, gold rushed towards the April highs of 2040-2045. Reaching them and further rising to the historical tops around 2070 is the most likely scenario, which can be cancelled not earlier than a return of the price below the 1995 mark.
The following trading strategy option can be suggested:
Buy gold in the range of 2010-2015. Take profit – 2040. Stop loss – 1995.
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.
