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The recent meeting of the U.S. Federal Reserve has led to a significant shift in gold prices, with Joaquin Monfort, European editor at FXStreet, offers insights into these developments and their implications for the price of the precious metal.
Following the adoption of an overall easing policy at the Federal Reserve's most recent meeting, Gold prices show a remarkable increase, with the price per ounce increasing by more than $30. This increase occurred after the Fed chose to maintain interest rates at their current levels and slow the pace of reducing its U.S. Treasury holdings, a move that was interpreted as "dovish" given the tapering of quantitative tightening.
Monfort, however, points to a subtly hawkish ring in the latest statement from the Federal Open Market Committee (FOMC), in particular acknowledging a lack of progress toward the committee's 2 percent inflation target in recent months. Fed Chair Jerome Powell's prepared remarks omitted any reference to rate cuts for the rest of the year, indicating a shift in the policy framework.
Analyzing the technical landscape, Monfort identifies the completion of a bearish Measured Move price pattern in spot gold, with the last C wave hitting the Fibonacci 0.681 price target of $2,286. This observation suggests a possible upward movement in prices.
Monfort outlines two possible scenarios for future price movements. A break below the 0.681 Fibonacci target lows at USD 2,285 could confirm further downward moves, with a possible target of USD 2,245. In contrast, a break above key resistance levels, including the cluster of moving averages and wave B's peak around $2,350, could signal a bullish reversal, with a retest of previous highs near $2,400.
Despite short-term fluctuations, Monfort emphasizes the medium- and long-term upward trend in gold prices.
In intraday trading, spot gold showed a slight decline, hitting a session low of $2,285.54 per ounce. At the time of the latest update, it is trading at $2,291.67, which represents a 1.20% decrease for the session.
In conclusion, the Federal Reserve's recent decisions have led to movements in gold prices, with analysts closely watching key technical levels and broader market trends for insights into future price movements.
On Thursday 16 May 2024, Holland Gold will host a event on Gold and world politics in the Georg Kessler Lounge at the AFAS AZ Stadium.
The event consists of three parts: one interview, one presentation and a Q&A session for the audience. For example, the gold rush is discussed in World Politics, the geopolitical tensions that are rising every day; in Ukraine, the Middle East, in West Africa and around Taiwan. What impact does this have on the financial system? Central banks seem to be caught in a gold rush. The yellow metal achieves a Record price. How long will the US dollar remain dominant?
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On behalf of Holland Gold, Paul Buitink and Joris Beemsterboer interview various economists and experts in the field of macroeconomics. The aim of the podcast is to provide the viewer with a better picture and guidance in an increasingly rapidly changing macroeconomic and monetary landscape. Click here to subscribe.
