After a triumphant three-week ascent, the Gold Spot Price (XAUUSD) recently faced a notable shift in 2024. A dip was prompted by the Spot Price’s struggle against a robust Greenback as traders recalibrated expectations for Federal Reserve monetary policy.
Amidst dwindling bets on a rate cut as early as March, from nearly 90% late last year to the current 67%, the U.S. dollar flexed its resilience. Despite this, markets still factor in a substantial 140 basis points of rate cuts in 2024, surpassing the Fed’s more conservative projection of 75 bps.
The ongoing tug-of-war between the Greenback and the precious metal hinges on forthcoming U.S. inflation data – a key determinant for gauging future monetary policy. As traders eagerly await this economic compass, it remains to be seen whether the Federal Reserve will yield to inflationary pressures or maintain its cautious stance, leaving the trajectory of the Gold Spot Price hanging in the balance.
The Gold Spot Price finds itself intricately entangled in a price battle against the Greenback, as revealed by its fluctuation around the 100-day moving average.
Amidst this tussle, a notable support level materialized at $1973.03 per ounce, coinciding with oversold Relative Strength Index (RSI) conditions. Buoyed by this foundation, the spot price surged past the 100-day moving average and psychological $2000 per ounce mark, only to encounter resistance at $2088.43 per ounce, where overbought RSI conditions prevailed.
The subsequent downturn witnessed the spot price slipping beneath the 100-day moving average yet finding a temporary refuge at the 61.80% Fibonacci Retracement Golden Ratio, marked by declining downside volume and oversold RSI conditions. This juncture now holds pivotal importance; if it solidifies as an intermediate support, the ongoing reversal might propel the spot price to retest $2088.43 per ounce if upside volumes are sustained. Conversely, a substantial breakdown below the Golden Ratio could usher in downside pressure, potentially revisiting the $1973.03 per ounce level.
Amidst the Gold Spot Price’s battle with the Greenback, the focus centres on the pivotal 61.80% Fibonacci Retracement Golden Ratio. This juncture potentially holds the key to the yellow metal’s trajectory. Market participants anxiously await cues to discern whether the precious metal succumbs to inflationary pressures or holds its ground amid cautious monetary policy.
Sources: CME, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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