• Tue. Apr 23rd, 2024

As US Yields Fall, the Price of Gold Rises but Stays Below the 50-Day Simple Moving Average (SMA)

Leon Kramer

ByLeon Kramer

Feb 22, 2024
As US Yields Fall, the Price of Gold Rises but Stays Below the 50-Day Simple Moving Average (SMA)

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  • Gold hits $2,028.44, rising for the fourth consecutive day due to China’s interest rate adjustments and US inflation data.
  • US Treasury bond yields decline, indicating market prudence and revised outlooks for Federal Reserve interest rate reductions in light of inflation concerns.
  • The market is looking forward to the FOMC minutes to get insights into the Fed’s policy direction, which is supporting Gold as a hedge against uncertainty.

In the middle of the North American session, traders from the United States returned to their workstations. They absorbed the most recent economic updates, which resulted in the price of Gold increasing for the fourth day in a row. Along with the decline in yields on US Treasury bonds, reports of China lowering interest rates contributed to the rise in the price of Gold.

In the meantime, the data that was released in the United States the previous week revealed that both the Consumer Price Index (CPI) and the Producer Price Index (PPI) exceeded expectations, which indicates that inflation is more persistent than was anticipated. The XAU/USD exchange rate is currently trading at $2,028.44, representing a price increase of 0.52%.

Immediately following the Presidents’ Day holiday that occurred on Monday, trading resumed in the United States on Tuesday. Bond yields issued by the United States Treasury experienced a slight decrease, with the yield on the 10-year note falling by four basis points to 4.256%.

Despite the fact that investors are very cautious about the Federal Reserve (Fed) of the United States, data from the Chicago Board of Trade (CBOT) suggests that the Fed is anticipated to reduce interest rates by 102 basis points in 2024. This is a decrease from the 180 basis point prediction that was made in the middle of January.

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However, the US dollar is holding steady due to the absence of economic information on the US schedule. Traders are eagerly anticipating the publication of the final Federal Open Market Committee (FOMC) Meeting Minutes.

Despite the Fact That Investors Are Pushing for Rate Cuts From the Federal Reserve to June, Gold Prices Rose

  • According to the CME FedWatch Tool, traders are anticipating the Federal Reserve will implement a 25 basis points rate reduction in June 2024.
  • Investors are factoring in 102 basis points of relaxation throughout 2024.
  • The US Dollar Index, which monitors how the US Dollar is performing in comparison to a selection of six key currencies, is presently fluctuating within a tight range near 104.20.
  • The most recent inflation updates from the US prompted a shift in language from Federal Reserve officials, who adopted a “guarded” stance. Atlanta Fed President Raphael Bostic indicated that the Federal Reserve is quick to loosen its policy.
  • Mary Daly, the President of the San Francisco Federal Reserve, emphasized the importance of exercising caution and flexibility in responding to changes in the economy instead of rushing into quick decisions.
  • During this week, the economic calendar in the United States will encompass the publication of the most recent minutes of the Federal Reserve Open Market Committee (FOMC), as well as several speeches delivered by officials from the Federal Reserve beginning on Wednesday.

Gold Holds Above 100-Day SMA, Targets 50-Day SMA Resistance

Despite the fact that it is still trading above the 200-day Simple Moving Average at $1,965.46 and is moving closer to the 50-day SMA at $2,033.69, the daily chart of Gold reveals that the metal is exhibiting a neutral to slightly downward bias. In the event that the second scenario is not met, the price will drop to $2,050 before reaching its most recent high of $2,065.60.

On the other hand, if sellers decide to intervene and drive prices below the $2,000 mark, the 100-day simple moving average, which is currently at $1,998, will be revealed. Next on the agenda is the 200-day Simple Moving Average, which is located at $1,965.47, followed by the low that was reached on December 13th, which was $1,973.13.

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Leon Kramer

Leon Kramer

Leon Kramer, a renowned financial author, enlightens Main Forex News readers with his deep understanding of currency markets. His years in global finance, combined with an intuitive grasp of trends, delivers insightful, up-to-the-minute foreign exchange analysis.

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