Technical Analysis

GOLD Price Analysis – March 29, 2024

By LonghornFX Technical Analysis
Mar 29, 20244 min

Daily Price Outlook

Gold price (XAU/USD) has been able to break its sluggish trading range and hit record highs above the $2,230 level. However, the upticks in gold prices were mainly driven by the sluggish performance of the US dollar and the prospect of interest rate cuts from the US Fed. Furthermore, ongoing geopolitical tensions were seen as another key factor that boosted the safe-haven gold price. Israeli forces besieged two Gaza hospitals, trapping medical teams amid gunfire. This heightens tension, prompting individuals to turn to safe investments like gold.

In contrast to this, hawkish Fed comments and robust US economic data could cap gains in the gold price as the hawkish Federal Reserve comments signal potential interest rate hikes, which could strengthen the US dollar and reduce the appeal of non-yielding assets like gold. Additionally, robust US economic data suggests less need for safe-haven assets, further suppressing gold prices.

Impact of Federal Reserve Policy and Economic Data on Gold Prices and US Dollar

On the US front, the possibility of interest rate cuts by the Federal Reserve has been weighing down the US dollar, which in turn is boosting gains in gold. Investors are expecting three rate cuts from the Fed this year, as the central bank has kept its benchmark borrowing rate steady at 5.25%-5.50% for the fifth consecutive time. However, the central bank still predicts three quarter-point cuts by year-end. Traders are currently estimating a 63% chance of a rate cut in June.

Thus, the anticipation of interest rate cuts is driving down the US dollar's value, making gold more attractive to investors. This trend is contributing to the upward movement in gold prices.

In contrast to this, if investors believe the Federal Reserve won't reduce interest rates as anticipated, it could strengthen the US dollar, which might slow down the increase in gold prices. However, the positive US economic data also supports this view, reducing the likelihood of rate cuts and further reinforcing the US dollar's strength.

Moving ahead, traders seem cautious to take any strong position as markets are closed for Good Friday, but attention will be on the US February Personal Consumption Expenditures Price Index (PCE) data. The Core PCE, which is the Federal Reserve's preferred measure of inflation, is expected to reveal a 0.3% rise in February.

Geopolitical Risks in the Middle East and Their Impact on Gold Prices

Another factor that has been boosting the safe-haven gold price was the ongoing geopolitical risk in the Middle East. This means that tensions and conflicts in that region, like the recent siege of Gaza hospitals by Israeli forces, can make investors nervous about the stability of other investments. Investors turn to safe-haven assets like gold, which tend to hold their value or even increase during uncertain times.

GOLD Price Chart - Source: Tradingview
GOLD Price Chart - Source: Tradingview

GOLD (XAU/USD) - Technical Analysis

On March 29, Gold (XAU/USD) experienced a notable increase, reaching $2233.12, a 1.74% gain, reflecting a robust bullish momentum in the market. The asset's movement has surpassed the pivot point at $2221.05, indicating potential for further upward trends. Key resistance levels are identified at $2243.71, $2259.74, and $2277.41, which could act as targets for continued bullish runs. Conversely, support levels are established at $2202.92, $2184.86, and $2165.23, providing potential fallback points should the market retract.

The technical indicators fortify the bullish outlook; the Relative Strength Index (RSI) at 76 suggests an overbought condition, signaling strong buying interest. Meanwhile, the 50-day Exponential Moving Average (EMA) at $2177.63 underscores a significant upward trend over the medium term, further corroborating the bullish sentiment in the market.

Considering these factors, the technical outlook for Gold suggests a strategic entry price for buying above $2225, with a take profit target at $2245, and a stop loss set at $2210 to manage risk.

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- EUR/USD Price Analysis – March 29, 2024

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