Gold | Ready for a big surge or a big drop? ๐Ÿ“ˆ๐Ÿ“‰

uPaSKaL Updated   
OANDA:XAUUSD   Gold Spot / U.S. Dollar
Gold is currently moving in a descending triangle.

Key support: 2144 - 2149
Key resistance: 2158 - 2163

Gold is waiting for interest rates to come in and provide a 200-400 pip fluctuation! ๐Ÿ’ฐ

Fundamental analysis:

Numbers above the expected limit of inflation in the United States last week confirmed that price pressures persist and the final stage of reaching the Federal Reserve's 2% inflation target remains a challenging process. This led to a 25 basis point increase in the yield of U.S. two-year Treasury notes during the week and the 10-year Treasury yield crossing the 4.30% threshold.

However, U.S. key indicators, with some arguments suggesting that the previous adjustment to reduce the central bank's interest rate hike delay until June 2024 would be sufficient, managed to stay on their short-term consolidation path. But on Friday, the tables turned and the S&P500 dropped from an all-time high, as equity bulls preferred to take a cautious stance ahead of this week's Federal Reserve meeting in anticipation of possible hawkish tones from the Fed.

The upcoming week will be a capybara week for central banks, with the Federal Reserve garnering more attention than others. The central banks of Japan, Australia, Switzerland, and the Bank of England are among the central banks that will make their latest decisions on interest rate changes this week.

Additionally, in the UK, February inflation data will be in focus ahead of the central bank's meeting as significantly different results from expectations could have a considerable impact on the Bank of England's decision on Thursday.

Today, industrial production, retail sales, and unemployment rate data for China in February and January were released. Despite continued weakness in China's real estate sector adding increasing pressure on the economy and confidence in the country's economic outlook, China's industrial production and retail sales surpassed expectations from January to February, marking a strong start for 2024 and providing relief for policymakers.

Today's data results, following better-than-expected recent exports and consumer inflation indicators, reinforce Beijing's hopes of achieving what analysts describe as the ambitious goal of 5% gross domestic product growth in the current year. ๐Ÿ“ˆ๐ŸŒ

What is the most likely scenario for the Federal Reserve meeting? ๐Ÿค”
The Federal Reserve, in its January meeting, kept the interest rate unchanged at 5.25% - 5.50% for the fourth consecutive session. The bank's statement indicated that while the option of lowering interest rates is still on the table, the Federal Reserve is not in a rush to implement this option and wants to ensure more certainty that inflation is moving steadily towards 2%.

It is expected that in Thursday's meeting, the Federal Reserve will maintain the interest rate unchanged at 5.25% to 5.50% and release a similar statement to the January one, reiterating its previous positions.

Therefore, such a procedure will draw attention to the updated dot plot chart, which will be the focal point of the March monetary policy meeting of the Federal Reserve. If only two participants adjust their forecasts, the midpoint indicates that the Federal Reserve expects to have only two interest rate cuts, much less than the seven cuts the market had predicted in the second week of January for 2024. The occurrence of such a scenario will support the dollar. ๐Ÿ’ต

The S&P Global PMIs and Jerome Powell's speech, market drivers post-Thursday

On Friday, the initial estimates of the S&P Global PMIs will attract investors' attention. Forecasts suggest a contraction in both manufacturing and services sectors in March. If the results exceed expectations, it could provide some support for the dollar index.

Jerome Powell, the Federal Reserve Chair, will be scrutinized on Friday, with not much time gap from Thursday's meeting. There is a slight possibility that Powell's positions on Friday may differ significantly from the Fed's stance on Thursday. However, if Powell's positions align with the updated dot plot and the Fed's stance, it will deepen the created volatility; otherwise, it will adjust the fluctuations arising from Thursday's results. ๐Ÿ“ˆ๐Ÿ”๐Ÿ—ฃ๏ธ

Gold took off on a strong upward trend after touching the support range and flew almost 300 pips :)
Powell, the Federal Reserve Chairman:

๐Ÿ”นInterest rates are likely at their peak.

๐Ÿ”นThere is a possibility of rate cuts at some point this year, but the outlook is uncertain, and we continue to monitor risks.

๐Ÿ”นWe are prepared to keep rates elevated for a longer period if needed.

๐Ÿ”นWe will carefully assess the data received to make decisions about monetary policy.

๐Ÿ”นBefore cutting rates, we need greater confidence in sustained inflation reduction.

๐Ÿ”นWe will make decisions on a meeting-by-meeting basis.

๐Ÿ”นUnexpected weakness in the labor market could also have a response.

๐Ÿ”นOur forecasts are not set in stone but are contingent on changing conditions.

Gold Technical Analysis:

Weak Support: 2160 - 2163
Strong Support: 2145 - 2150

With the price hitting the range of 2160 - 2163 and rising to 2167, and the strength of the downtrend becoming apparent, this support may no longer be valid, and we should wait for its break!

The downtrend is expected to continue towards the support at 2145 - 2150.

Gold is in a downward trend as long as it cannot hold its price above 2178-2180! Confirmation of an uptrend could be breaking this range! Otherwise, our trend is downward towards the range of 2160-2163.

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