Gold prices are close to a three-month low as U.S. Federal Reserve System (Fed) Chairman Jerome Powell considers the possibility of further interest rate hikes.
Yesterday, Powell confirmed the probability of 2 more rate hikes by the Fed. At the same time, he does not expect inflation to fall to the target level of 2% by 2025.
According to the Fedwatch CME, investors now estimate an 81% chance that interest rates will increase by 25 basis points in July.
Today market participants are waiting for the initial jobless claims in the U.S. and the final GDP data for the first quarter.
Economists have warned that when gold’s price ascends to the highest levels, it is a sign of a recession approaching. In a world of rising interest rates and slow economic growth, gold no longer holds much appeal for investors.
According to Tyler Cowan, currently, gold correlates with both low interest rates and global economic growth. This no longer characterizes it as a good hedging tool. Precious metal is now just like any other cyclical economic asset. This explains its high cost. Gold is no longer an indicator of economic decline.
Data on the U.S. economy was the most positive since 2021. According to Jonathan Levine, this does not indicate a recession.
The metal is correcting in a downward corridor on the H4 timeframe.
The Relative Strength Index (standard values) shows a divergence, which gives a leading signal for the possibility of a trend change.
The gold exchange rate is moving to the round level of 1900.00. The strength of this support level is not only due to technical analysis, but also in terms of trading psychology.
A pullback from this level could be the beginning of the uptrend formation. The nearest resistance is at the level of 1930.00.
Short-term prospects for gold are to buy.
The target is at the level of 1958.00.
Part of the profit should be fixed near the level of 1930.00.
The stop-loss is at the level of 1865.00.
Bullish trend has a short-term character, so the volume of trade should not exceed 2% of your balance.