Ever wondered how the Federal Reserve’s cautious dance with interest rates could make XAUUSD feel like it’s riding a rollercoaster? Join us for a wild ride through the twists and turns of financial markets, where even geopolitics adds its own flavour to the mix.
Source : AI Image Generator
Amid the Federal Reserve’s cautious approach to lowering interest rates swiftly, gold prices took a dip but managed to stay above the crucial support level of $1984.03. Fed officials, as noted in their January meeting minutes, were hesitant to slash rates too rapidly this year, staying vigilant against potential inflation spikes.
Source https://en.m.wikipedia.org/wiki/Federal_Reserve_Board_of_Governors
https://www.federalreserve.gov/monetarypolicy/fomcminutes20240131.htm
The market sentiment leans towards risk aversion due to ongoing uncertainties in the Middle East, which has boosted the appeal of gold as a safe-haven asset amidst changing economic conditions. This sentiment persists following reports of a tragic incident in central Gaza on February 23, 2023, where Israeli army actions resulted in casualties, leading to calls for intervention from the international community.
From a technical analysis standpoint, looking at the daily chart of XAUUSD, the price has been trading within a range bounded by $2065.00 as resistance and $1984.03 as support since February 1, 2024. If the resistance level is breached, there’s a likelihood of the price ascending, but failure to breach resistance could lead to a descent towards the support level. If the support level is breached, further downward movement becomes more probable.
Source : XAUUSD Daily Chart from Metatrader 4
Zooming into the 4-hour timeframe, there’s an upward trend observable. A trendline originating from $1984.22 initially rejected the price at $1995.31, and subsequently, at $2019.77, after the price peaked at $2034.73. With the current price around $2025.05, a break below the trendline suggests a potential reversal, while maintaining the rejection at the second trendline signals a probable upward movement towards $2034.73.
Source : XAUUSD 4HR Chart from Metatrader 4
