Gold prices are declining after the Federal Reserve (Fed) Chair's speech at the Capitol.
Fed Chair Jerome Powell presented the regulator's semi-annual economic report to Congress for two consecutive days. Powell's main message was aimed at bringing inflation down to the 2% target. This would require a stronger monetary policy tightening. He added that interest rates would be raised again this year, despite Democratic lawmakers' concerns about rising unemployment.
The Fed's hawkish policy is boosting the U.S. dollar, making the yellow metal a less attractive asset for foreign investors.
ANZ analysts believe the current decline in prices is a good opportunity to buy gold. They expect the precious metal to rise to $2,100 per ounce by the end of the year.
One way or another, the Fed will end its cycle of monetary policy tightening this year. Starting from 2024, the regulator will begin to lower interest rates. This process will provide structural support for the gold market in the medium and long term.
In addition to the regulator's policy easing, demand for the yellow metal might rise due to growing risks of a recession in the global economy. ANZ analysts point to a high level of geopolitical tension ahead of the 2024 U.S. presidential election, which also favors steady gold demand.
Against this background, investors tend to hedge risks and increase the share of gold in their portfolios. ETFs are expected to boost purchases of the yellow metal. The current decline in prices opens many opportunities to build up long positions. ANZ experts point to a gradual rise in gold demand as the price decreases.
Gold is headed for the round level of 1900.00. The previous forecast almost meets expectations. The strength of this support level is determined not only by the technical analysis, but also by trading psychology.
A pullback from this level might be the beginning of the uptrend formation.
Signal:
The short-term outlook for gold suggests buying at around 1900.00.
The target is at the level of 1960.00.
Part of the profit should be taken near 1925.00.
The Stop-loss is set at 1860.00.
Bullish trend has a short-term character, so the trade volume should not be more than 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
