Gold suddenly soared after the Fed meeting

Gold price today (March 21), reversed and skyrocketed in the international market, after the Fed ended its March 2024 session. The Fed's forecast to cut interest rates this year has caused the USD to plummet. Investors have massively bought gold, causing the price of the precious metal to skyrocket.

The US Federal Reserve (Fed) ended its 2-day March meeting early this morning. This agency decided to keep the USD operating interest rate in the range of 5.25-5.5% - the highest in 22 years and exactly as expected by the market.

This is the fifth time the Fed has kept interest rates at this high level. Thanks to this interest rate, inflation in the US has decreased from a 40-year peak in the middle of last year to 3.2% in February 2024.

Although the Fed's decision was as expected, Fed Chairman Jerome Powell talked about cutting interest rates this year. Information from the Fed, the market expects the Fed to reduce interest rates to 3.9% by the end of 2025, which indicates the possibility that the Fed will have at least 3 interest rate cuts, each by 0.25%. from the end of this year to the end of next year.

Clearer interest rate information has caused gold prices to reflect positively on the Fed's decision. Investors believe that falling interest rates will reduce the cost of speculation as well as deposits for gold transactions.

Comment:

The new high of around 2222 has put down a new marker for gold bulls, backed by higher central bank purchases, most notably from China in recent times. The precious metal may be due for a temporary pullback after the large move and could soon find resistance it the dollar recovers and continues its recent uptrend. Support remains back at 2146.

Comment:

Comment:

Witnessing the strong increase in gold prices after the Fed meeting, Reuters technical analyst Wang Tao optimistically predicted that spot gold could retest the resistance level at 2,222 USD/ounce. If this threshold is broken, it is very likely that gold prices will conquer levels in the range of 2,228 - 2,234 USD/ounce.

Comment:

Despite the pressure, expectations that the Fed will definitely cut interest rates this year, the demand of central banks along with the demand from retail investors and risk prevention are holding back gold's decline. . Gold will need to maintain support between 2,150 – 2,145 USD/ounce to continue its upward momentum.

Comment:

World gold prices may still be under pressure, as the US economy continues to announce new home sales in February. Currently, it is forecast that home sales in February are increasing compared to the previous month. If the data is as expected, it proves that the US economy is recovering positively, people have accumulated money to buy houses and invest in real estate. This will cause gold prices to continue to retreat further.

Comment:

This week, the gold market will receive information on US new home sales on Monday (March 25), the Richmond Fed survey on Tuesday (March 26), information on number of mortgage applications on Wednesday (March 27) and GDP growth figures for the fourth quarter of 2023 (last published); number of people applying for unemployment benefits for the first time; Pending home sales and the University of Michigan's consumer confidence survey results on Thursday (March 28).

Comment:

Our data shows traders are now net-long Gold for the first time since Mar 01, 2024 when Gold traded near 2,082.75. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Gold-bearish contrarian trading bias.

Comment:

Meanwhile, the Bears' next near-term downside price objective is pushing futures prices below solid technical support at last week's low of $2,149.20 an ounce. First resistance was seen at the overnight high of $2,179.50 per ounce and then at the March 22 high of $2,188.00 per ounce.