After the release of the minutes from the latest US Federal Reserve meeting, the price of gold fell to $2370.00 per troy ounce. The Fed’s policymakers displayed a notably cautious sentiment, indicating the need for more time to be confident that US inflation is declining towards the 2% target. This cautious stance has tempered market expectations of imminent interest rate cuts, with the market now anticipating no more than one rate cut instead of the previously expected two.
The cautious stance taken by the Federal Reserve has had a direct impact on gold prices. Higher interest rates reduce the attractiveness of gold, as it does not yield interest. This dynamic has contributed to the recent decline in gold prices, as investors are less likely to turn to the precious metal in a high-interest rate environment. As a result, the technical analysis of XAU/USD indicates a potential further decline in gold prices to $2322.00, followed by a rebound to $2385.35.
On the H4 chart, XAU/USD has formed a downward impulse, followed by a correction before breaking out downwards. The MACD indicator supports this scenario, pointing towards further lows. On the H1 chart, a decline has been executed, followed by a consolidation range breakout, indicating a potential further decline to $2337.35. The Stochastic oscillator also confirms this downward trend, with a possible rise before another decline.
Gold investors should closely monitor the technical indicators and price levels discussed above as market conditions evolve. The Fed’s cautious stance on monetary policy and the expectation of prolonged high-interest rates are likely to continue impacting gold prices in the near future. It is essential for investors to stay informed and adapt their strategies accordingly to navigate the current market dynamics effectively.
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