Gold prices hit a new record of $2,265 an ounce on Monday, boosted by expectations of an interest rate cut by the US Federal Reserve (Fed) and rising geopolitical instability.
A drop in February's personal consumption expenditures price index bolstered the case for lower US borrowing costs, despite the Fed's cautious tone.
As Fed Chairman Jerome Powell said last Friday, inflation is broadly in line with the regulator's expectations and there is no need to rush to cut rates. The market is now awaiting the release of US employment data on Friday to further assess the economic outlook and Fed policy.
Despite Powell's statement, the CME's FedWatch tool puts the probability of the Fed cutting rates in June at 69%. This supports gold's rally as lower interest rates reduce the opportunity cost of holding gold.
Since February, the yellow metal has gained 14%. This has been driven by the prospect of monetary easing by the world's major central banks and increasing geopolitical instability in the Middle East.
The price of gold on the D1 chart shows a bullish trend developing.
The price is close to the trend resistance which may limit gold's growth. The divergence of the Stochastic Oscillator indicator (standard values) on the H6 timeframe indicates that the price may change its direction to the downside within the ascending channel.
Fundamental factors continue to support buying interest in the precious metal, as traders look for more favorable conditions to open long positions. The local trend line could be the exit point for buying gold.
Signal:
Short-term prospects for GOLD suggest buying around the 2180.00 level.
The target is at the level of 2295.00.
Part of the profit should be taken near the level of 2230.00.
A stop-loss could be placed at the level of 2100.00.
The bullish trend is short-term, so trade volume should not exceed 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.
