Gold prices, as expected, failed to consolidate above the level of $2,400 per ounce and went into correction. The price dropped, but around the level of 2,285 market participants returned to buying the yellow metal. The majority of traders keep the positive outlook for gold in the long term and use the price pullback to increase long positions. The bulls can easily push the price up to the 2,340 level.
The results of yesterday’s Fed meeting were met with moderate optimism in the gold market. Postponing the first key rate cut to the fall was forecast in April and did not come as a surprise, and Jerome Powell sensibly avoided any further tightening of rhetoric. In addition, the head of the U.S. regulator considered an additional rate hike unlikely. Even without monetary policy easing by the Fed, the yellow metal is holding near historical highs, confirming the continuation of the uptrend.
Nicholas Snowdon, head of Metals Research at Goldman Sachs, highlights the disrupted relationship between Fed policy and gold prices. In the current environment of geopolitical tensions, both retail investors and central banks are ignoring high interest rates and continuing to buy the precious metal. Goldman Sachs expert confirmed the forecast for the gold price to rise to $2,700 per ounce by the end of 2024.
Participants of the physical gold market have already returned to buying. The yellow metal is again traded at a premium to official prices in India after 2 months. According to local dealers and jewelers, the correction was expected for a long time, so even with a relatively small drop in prices demand has recovered sharply. A significant decline in imports in recent weeks also contributes to the local gold deficit.
Gold prices will face another test this week. Tomorrow's U.S. labor market report for April will increase volatility in the financial markets. If there are no negative surprises from the economic statistics, the yellow metal will continue its rise to 2,340.
Consider the following trading strategy:
Buy gold at the current price. Take profit – 2,340. Stop loss – 2,285.
Traders may also 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.
