- A new historic record peak for the gold price trajectory.
- Following the announcement of the US Federal Reserve's policy decisions, spot gold prices moved towards the $3052 per ounce resistance level, the highest in the history of gold bullion prices, and around which it is stable at the beginning of Thursday's trading.
- According to gold market experts, the gold index continues its entry into the mainstream market, as fund managers increase their allocations, as evidenced by a 5% increase in ETF holdings over the past 12 months.
- It is worth noting that ETF holdings are still significantly below COVID levels, allowing ample room for further gains as speculators enter the market.
Weak US Dollar Boosts Gold Gains
According to Forex market trading, the US Dollar Index (DXY), which measures the performance of the US currency against a basket of other major currencies, gave up some of its gains, but remained in positive territory yesterday, trading around 103.4 points, as traders digested the recent FOMC decision. As widely expected, the Federal Reserve kept US interest rates unchanged, confirming its expectations of two US interest rate cuts this year.
However, the US central bank revised down its GDP growth forecast and raised its inflation forecast, indicating concerns about the economic outlook. During the press conference following the meeting, US Federal Reserve Chairman Jerome Powell highlighted the impact of trade policy, immigration, fiscal measures, and regulation on economic conditions. Financial markets are now aligned with the Fed's expectations, anticipating two US interest rate cuts this year, with the first expected in June or July.
On another front affecting the gold market, the yield on the 10-year US Treasury note fell below the 4.3% threshold yesterday after the Federal Reserve left interest rates unchanged, as expected, and announced that it would slow the pace of its balance sheet reduction next month.
The Federal Open Market Committee (FOMC) forecasts reflected a median expectation of two additional interest rate cuts this year. This was consistent with expectations of lower GDP growth and higher unemployment, offsetting expectations of higher inflation, likely as a result of President Trump's aggressive tariffs
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Interest rate futures were little changed, as markets continued to price in two 25 basis point rate cuts in the second half of the year. Meanwhile, bond markets were also supported by the Fed's decision to slow the pace of its current quantitative tightening amid signs of declining underlying liquidity and the risks of more conservative Treasury bonds with government debt limit issues. The Federal Reserve's reduction in Treasury holdings will slow to $5 billion per month, while mortgage-backed securities (MBS) prices remain unchanged.
Trading Tips:
As I mentioned before, gold price stability above the $3000 peak will boost bulls' gains towards new record peaks.
US Stocks Rise Following Interest Rate Cut Signal
During yesterday's session and across stock trading platforms, US stock market indices rose following the Federal Reserve's decision to keep US interest rates steady, as expected, while indicating two more rate cuts later this year. According to trading, the Standard & Poor's 500 rose 1.1%, the Dow Jones gained 384 points, and the Nasdaq 100 led the gains with a 1.4% jump.
On the stock price front, tech stocks maintained their gains as volatility subsided, with Nvidia (up 1.8%), Broadcom (up 3.7%), and Alphabet (up 2.2%) all posting strong gains. Tesla shares also rose by 4.7% after securing $1 billion in equity financing.
Gold Price Technical Analysis and Expectations Today:
Based on the performance on the daily chart above and today's gold analysts' forecasts, the overall trend for gold prices remains bullish. As we mentioned before, gold investors may not be reacting to technical indicators moving toward strong overbought levels after consecutive record gains, as much as they are paying attention to the factors driving gold's gains. Clearly, the most notably factors are global geopolitical and trade tensions and increased gold purchases by global central banks to hedge against Trump's policies. Also, there are concerns that gold may be subject to his tariffs. Currently, the closest resistance levels for gold prices are $3,055, $3,082, and $3,125 per ounce, respectively.
Overall, bulls have a strong technical advantage in April gold futures. technically, the next upside price objective for bulls is a close above strong resistance at $3,100.00. The next downside price objective for bears is a push below strong technical support at $2,900.00.
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