The gold price is restrained around a 38.2% Fibonacci and is on the backside of the micro trendline.
Gold is trading 0.1% higher in Tokyo after rebounding from a low of $1,989.15 to a high of $1,992.29 so far. But it remains on shaky ground below the key $2,000 barrier on Wednesday.
The US Dollar and bond rates have been climbing ahead of the Federal Reserve’s predicted raise next week. Creating a negative environment for the yellow metal. The policy committee of the Federal Reserve is projected to finish with a 25-basis-point hike in interest rates.
We anticipate that the FOMC will raise rates by 25 basis points when it meets next week. That would leave the objective maximum for fed funds at 5.25% and effective fed funds at the median (and ending in 2023). ANZ Bank analysts predicted a plot of 5.10%.
Our baseline projection is for another 25-basis point increase to 5.50%. However, in terms of the larger picture, the tightening cycle may be reaching its end. We anticipate that future rate decisions will be made meeting by meeting,” the analysts wrote.
According to our GDP forecasts, the delayed effects of last year’s rate hikes will be felt more acutely in Q2. We anticipate that consumption and labor market growth will slow. However, core services inflation outside of the shelter may take some time to subside.
”The FOMC will take bank soundness into account in its deliberations. In order to safeguard the value of bank assets, inflation must be brought under control. We anticipate that Fed funds will remain stable in H2 2023. to keep inflation under control,” the analyst’s statement concluded.
The Fed’s stance is impacting on gold.
Meanwhile, Fed tightening expectations have dipped somewhat, with the WIRP now predicting a 25-basis point raise at the May 2-3 meeting, down from 90% at the outset of this week and down to 80% at the start of last week and 70% at the start of the week before that.
Brown Brothers Harriman analysts believe there is no chance of another 25-basis point raise in June, down from approximately 15% earlier this week.
”The Fed will have digested two additional job data, two CPI/PPI reports, and one retail sales report between the May 2-3 and June 13-14 meetings. At this stage, a respite in June is possible. ”After all of that, two cutbacks are now priced in by year-end, compared to one at the outset of this week and two at the start of last week. Powell has stated that Fed officials “just don’t see” any rate reduction this year. ”We agree.”
Meanwhile, TD Securities analysts have noted that discretionary traders are still sitting on the sidelines. Implying that price decreases are still not passing through to interest.
”Weaker longs remain vulnerable in the short term. But we don’t anticipate the first substantial selling program to come in until prices break through.” $1964/oz.
In a broken-down market, the gold price is burdened technically.Zooming in, we can see that the bears are closing in on the backside of the micro trendline and that the gold price is being rejected around a 38.2% Fibonacci retracement.
