Technical Analysis of Gold Prices

Gold prices are being pushed down by a strong US Dollar following the Federal Reserve’s policy update. Interest rates remain at 4.25%–4.50%, but the Fed hinted at possible tightening of monetary policy. While long-term US Treasury yields have dropped, short-term yields have increased, highlighting concerns about inflation. Technical analysis shows that Gold traders are cautious near $3,370. Prices are close to important levels marked by the Fibonacci retracement, with potential resistance at $3,371. If prices break above this level, they may reach $3,400. However, if they fall below the 20-day Moving Average, we could see a drop to $3,314. Gold is usually seen as a safe investment and often moves in the opposite direction of the US Dollar. Times of market instability or fears of recession increase Gold’s attractiveness because it does not yield interest and is priced in US Dollars globally. Given the current situation, it’s evident that Gold’s stability presents both opportunities and challenges for traders. Increased volatility, primarily due to political tensions—especially in the Middle East—encourages traders to turn to precious metals for protection. Comments from the US President have caused brief price fluctuations, but the overall range between $3,360 and $3,400 remains intact. This behavior indicates a market limited by uncertainty rather than excitement.

Inflation and Market Reactions

During the holiday-thinned trading around Juneteenth, the market had less natural depth, which can magnify even small moves by institutions. Geopolitical events, especially those involving military powers, are pivotal in shaping risk sentiment. Signals from Russia towards Washington and Israel’s military posture are not just headlines—they impact market sentiment, leading investors to seek safe assets during overall sell-offs. The Federal Reserve’s recent communication hasn’t eased tension in the futures markets. Although rates remain unchanged, the Fed made it clear they are prepared to tighten further. The changes in yield curves are more telling than verbal statements: short-dated treasuries are rising, while long-dated ones are dropping, indicating that worries about persistent inflation are outweighing growth prospects. The central bank’s policies wield significant influence over pricing. Create your live VT Markets account and start trading now.

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