Gold XAUUSD Recap
Last year gold prices zoomed in October when Hamas attacked Israel and major confrontation started in middle east. Gold prices zoomed from 1800 sub levels to new lifetime high of 2144$ in December. 2023 was a good year for gold prices. Despite pressure from bond market and rising interest rate by FOMC , Gold prices didn’t show any major crack and made new lifetime high.
Golden Period of Gold in 2024 ?
Gold prices already seen significant boost in prices last year. This year FED planned to cut interest rate to boost economy. Fed chairman signaled that we may see 3-4 rate cut this year. Even if we estimate conservative cuts of 25 bps. We are talking about interest rate going down from 5.5% to 4.75%.
Interest rate reduction will also enable buyers to take call on US economy. Despite one of the most resilient market in recent times. We have heard concern about overheated economy from many analysts. Even Fed chairman said they will risk rising inflation than recession in his last statement.
Gold has already tested above 2450$ on 22nd May 2024. But it crashed very quickly and could not hold the ground. A quick decline in gold prices was imminent but this flash crash could have repercussion for upcoming months.
Latest inflation data suggests Fed won’t be raising interest rate at least till July. Middle east is also calming down day by day. So gold prices does not have much incentive to rise before a rate cut by Federal reserve.
Conclusion
Gold XAUUSD prices started this year with comfortable lead over 2000$. Rosy picture for this year cannot be ignored. But till Fed actually starts cutting rate later this year. We may have seen the top or we may see 2-3% higher levels from top.
Currently gold prices are fix at 2370$. Positional chart still suggests it is in positive zone. But the way XAUUSD cracked in last few days. I would be skeptical to initiate fresh buying on these levels.