After seeing excellent two-way market swings the day before, gold is treading water below $2,000 early Tuesday. Investors remain upbeat despite some promising banking sector data from the United States. As they await the important US Federal Reserve policy decision on Wednesday.
The US dollar has paused its drop as the US Federal Reserve opens a two-day meeting on Tuesday.
Despite a pause in the US Dollar’s (USD) decline. Gold is finding some support as risk sentiment remains favorable following a Bloomberg report that “US officials are studying ways they might temporarily expand Federal Deposit Insurance Corporation (FDIC) coverage to all deposits. A move sought by a coalition of banks arguing that it’s needed to head off a potential financial crisis.”
Yet, there are growing predictions that the Federal Reserve will refrain from raising interest rates on Wednesday. In the face of the banking sector crisis, market optimism may be strengthened. If the risk rally gains traction, the US Dollar is expected to resume its decline. Encouraging bullish bets for gold prices over $2,000 per ounce. According to the CME Group’s Fed Watch tool, investors are betting 30% on a Fed rate rise halt this month. However, bets on the Fed cutting interest rates before the end of the year have increased, endangering the US Dollar’s rebound.
Markets are also avoiding any directional bets on the gold price as a two-day Federal Reserve meeting begins on Tuesday, with a major policy decision expected on Wednesday. Nonetheless, investors remain attentive in terms of global banking sector changes and the future of the United States Existing House Sales statistics.
Gold Technical Outlook
The gold price jumped beyond the critical $2,000 level on Monday. But failed to close above it on a daily basis.
Gold bulls should exercise care as the 14-day Relative Strength Index (RSI) remains in overbought territory.
Acceptance over the $2,000 level, however, is important to maintaining the present positive trend.
The yearly high of $2,010 is considered as the next upward objective for gold buyers. All eyes will be on the 2022 high of $2,071 and the all-time high of $2,075.
On the other hand, a pullback in the gold price may first find buyers below the $1,970 round figure. Below which the previous day’s low of $1,966 will be challenged.
Gold sellers will then attempt to break the February high at $1,960, which may be difficult to break.
