Gold prices are trading in a narrow range with slight gains as support from a weakening dollar offsets concerns about the next U.S. Federal Reserve (Fed) interest rate decision.
Gold's uptrend remains in place. The big question now is when the U.S. central bank will end its campaign to raise interest rates, said Ilya Spivak, head of global macroeconomics at Tastylive. When there's more clarity on that, gold prices will steadily rise, he added.
The U.S. Fed meeting is expected next week. The May consumer price report is due out June 13 in the U.S. It will provide investors with more clarity on the health of the world's largest economy after recent mixed data and dovish comments from Fed officials.
Traders estimated that there is an 80.6% chance the Fed will keep interest rates unchanged, according to the CME Fedwatch tool. However, they predict there is a 51% chance of a 25 basis point rate hike in July.
Any price below $2,000 an ounce remains an attractive entry point for investors, according to Nitesh Shah, head of commodity research at WisdomTree. According to the analyst's forecast, gold price will significantly increase. By the first quarter of 2024 the cost of the precious metal can reach a new historical maximum of $2285.
Investors in gold should not be afraid if monetary policy tightening continues contrary to forecasts. A rate hike brings the economy closer to recession. In that case, market interest in safe-haven assets will increase again, Shah added.
The price of gold is correcting in the range of 1935.00 - 1984.00 after moving outside the downtrend on the H4 timeframe.
The RSI (standard values) displays convergence on the hourly timeframe, indicating a continuation of the uptrend.
The short-term outlook for Gold is to buy.
The target is at the level of 1982.50.
Part of the profit should be fixed near the level of 1970.00.
A stop-loss should be placed at the level of 1925.00.
The bullish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.