According to NAGA analyst, Fed rate hike of more than 50bp can significantly pressure the price of Gold
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Gold's price remains under pressure from a strengthening US Dollar, higher interest rates, and high bond yields. This week's price has declined for 3 consecutive days and this morning. This month's price has declined by 5.5% and has fully corrected the bullish price movement experienced in January 2023.
According to analysts, there is a 30-35% chance of the Federal Reserve increasing interest rates by 50 basis points
The price has now reached a resistance level which may now be converted to a support level. This would follow the traditional Elliot wave-style trend. However, the price is yet to obtain any indications of a loss of momentum from divergence or price action. Most indications continue to point towards sellers maintaining control. Moving Averages and the MACD are crossed downwards, and the price is below 50.00 on oscillators. This indicates a further downward trend, but investors will be cautious that the price is close to a previous resistance level from February 17th.
XAU/USD 8-Hour Chart on February 24th
According to analysts, there is a 30-35% chance of the Federal Reserve increasing interest rates by 50 basis points. A larger interest rate hike can significantly pressure the price of Gold. However, even if the Federal Reserve does not increase by 50 basis points, the Fed’s rate will likely continue rising beyond March. Higher interest rates increase the return on Dollar investments, and Bond yields have also recently increased. The Dollar, Bonds, and Gold are the top three haven assets, but the pressure is mounting on Gold as the return on the other two assets increase.
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The US Commodity Futures Trading Commission will release its latest report on how investors speculate on Gold this afternoon. The latest reports have all confirmed investors are expecting the price of Gold to decline. However, traders question whether the price can continue to break through support levels after a month of declines.
