Gold Higher on Monday
Gold prices are kicking off the week on a strong footing with the futures market trading up to new highs on Monday. Dovish Fed expectations and rising safe-haven demand in response to geopolitical tensions mean that gold is poised to continue to advance near-term. Alongside a fresh rate cut last week the Fed signalled two further rate-cuts this year (as per the latest dot plot forecasts). This marks a firm dovish shift for the Fed and is widely expected to see USD trading lower through the end of the year. However, there is some uncertainty in the outlook with the Fed raising its GDP forecast while reaffirming its concern over persistent inflation risks.
Post-FOMC USD Reaction
USD has traded higher in the aftermath of the FOMC, suggesting that the Fed wasn’t quite as dovish as traders were looking for them to be. However, the move hasn’t blunted upside in gold and should USD start to trade lower in response to any incoming US data weakness, particularly any downside in inflation, this should see gold demand ramping up near-term.
Safe-Haven Demand
Away from the Fed and USD, gold prices are also being boosted by ongoing concern over the Russia-Ukraine conflict and Israel’s military actions in the Middle East. Recent Russian incursions into NATO airspace and escalated aggression against Ukraine show that the war isn’t slowing down. While this narrative holds, gold prices should continue to see fresh safe-haven demand.
Technical Views
Gold
The brief dip lower in gold last week has now reversed with price trading firmly back above the 3,652.34 level. With momentum studies turning higher again, focus is on a test of the 3,800 level next. The bullish outlook remains intact while price holds above the bull trend line and 3,493.81 level.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.