Last week, gold prices updated the historical maximum again, for the first time overcoming the level of 2200 dollars per ounce. However, gold prices returned to the range of 2150-2185. Short-term bullish factors have already played their role, and gold buyers hurried to fix their profits. This correction is supported by both fundamental and technical factors, and its nearest target is 2150.
Euphoria in the gold market, caused by the results of the Fed's March meeting, is gradually disappearing. In general, except for the preservation of the forecast of 3 key rate cuts in 2024, the comments of Jerome Powell can not be called clearly dovish. Macquarie analysts believe the reaction of financial markets is excessive, and other officials of the Fed may be far from soft rhetoric. On Friday, this forecast has already started to come true.
The Head of the Federal Reserve Bank (FRB) of Atlanta Raphael Bostic in his speech announced a less significant easing of monetary policy than he had expected in the past. Bostic expects only one rate cut of 0.25% before the end of this year. Strong economic growth, steady inflation and unemployment below 4% require the Fed to be patient with the timing of the interest rate cut cycle, he said.
On the physical gold market, a cooling of demand is also noticeable. Indian dealers continue to increase discounts on gold, for the last week their amount increased from $36 to $38 per ounce. According to local jewelers, retail buyers are waiting for lower prices and are now abandoning gold jewelry. Brian Lan of GoldSilver Central also noted the massive gold sales in Singapore. In his opinion, people see more upside potential in silver, while gold at current prices is not in favor.
On the daily gold chart, the RSI indicator has left the overbought zone and is moving downward, confirming the sell signal. Until the level of 2150, a significant increase in activity on the part of the bulls is not expected.
The following trading strategy may be offered:
Sell gold at the current price. Take profit – 2150. Stop loss – 2185.
Also, traders can use a Trailing Stop instead of a fixed Stop-loss at their discretion.
This content is for informational purposes only and is not intended to be investing advice.
