Gold waits for the Fed’s next step. The Vix, also known as “the dread gauge,” strips 18% of this month’s gain, indicating that gold values are still uncertain.
Gold trades sideways
As market players wait for Jerome Powell to offer a view of the growth prospects for the biggest economy in the world, XAUUSD trades slanting around $1,946.
After yesterday’s drop, gold prices have stabilized, bringing XAUUSD into a narrow range of around $1,946. Participants in the market appear to be regaining confidence as concerns over the banking problem start to fade. This has been demonstrated by a sharp decline in the VIX indicator. Which gauges the S&P 500’s volatility and has earned the moniker “the dread gauge.”
The VIX began to rise quickly at the beginning of a possible banking crisis. Which was made worse since Credit Suisse looked to be having financial difficulties. But after increasing by about 37%, the VIX abruptly dropped, giving up about 18% of its initial gains.
Gold has a sensitivity to growth
Gold’s reputation as an inflation hedge and sensitivity to growth prospects led to its safe-haven appeal. And helped push prices higher. However, a $2000 split was made possible by the anticipation of the Fed’s coming move.
Markets are currently factoring in a 25 bp rate increase, half of what was expected two weeks back. Given the FOMC economic forecasts and the Fed’s hike in rates on today’s economic agenda.
Today’s Economic Activity Schedule
Technical Perspective
Gold prices began to decline this past week after surging to a new high of $2,014.9. Wiping out a tiny portion of the latest gains. Fears of a recession are gradually fading, and XAU has temporarily found support near $1,946. There are two possible outcomes as long as important technical values act as both support and resistance for price action.
Gold may experience a greater drop toward $1,900. If Fed Chairman Powell raises rates by 50 basis points (in excess of expectation) and says that the interest rate path will not alter. On the contrary hand, gold could resume its bullish trend and approach $2,000. If the Fed pauses or adheres to a 25 bps (0.25%) hike.
