- Gold price hits fresh all-time highs amid geopolitics and economic worries.
- All eyes are on FOMC monetary policy and future projections.
- Technically, gold is overbought with a correction due to a bullish trend.
The gold price tested fresh all-time highs at $3,045 on Wednesday before correcting to the $3,030 area. The heightened political and economic worries have reinforced the safe haven status of gold.
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A major catalyst behind the recent gold surge was the arrest of Istanbul Mayor Ekrem Imamoglu, a key rival of Turkish President Erdogan. His detention was carried out on allegations of corruption and aiding terrorist groups. The political instability in Turkey triggered a risk-off sentiment, pushing investors towards gold.
Moreover, the Russia-Ukraine conflict remains a concern for the investors. Despite a high-profile call between Trump and Putin, no ceasefire agreement was reached. However, both leaders agreed to halt attacks on energy infrastructure. However, Ukrainian President Zelenskyy rejected the talks, saying that negotiations about Ukraine without Ukraine would be ineffective.
Traders brace for strong volatility ahead of the FOMC rate decision today. The Federal Reserve is set to release a Summary of Economic Projections, followed by a speech by Fed Chair Powell. Investors will keenly look for the Fed’s 2025 interest rate projections outlook. As per the CME FedWatch tool, the central bank has a 99% probability of holding rates at 4.25% – 4.50%, while there is a 64% chance of a rate cut in June. A shift in policy could influence gold, as higher rates usually weigh on non-yielding assets like gold.
Over the past 210 days, the gold has rallied from $2,500 to $3,000, which is faster than historical trends. Usually, it takes around 1700 days for gold to rise to $500. Market participants consider weaker dollar, inflation risk, and geopolitics as key contributors to the aggressive rally. According to the Bank of America’s survey, fund managers have aggressively moved from equities, which signals that gold has become a favorite asset due to higher returns.
Gold key events today
- Federal Funds Rate
- FOMC Economic Projections
- FOMC Statement
- FOMC Press Conference
Gold Price Technical Analysis: Mild Correction Ahead of Continuation
The 4-hour chart of gold is strongly bullish, with a recent candle retracing down $10-15 from its peak. The RSI value remains in the overbought zone, which shows a potential correction from the top.
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The price is far above the 30-period SMA, a sign of a potential correction. However, the trend remains bullish; any dip could be a buying opportunity. On the downside, $3,000 is now a tough support ahead of $2,980 and then $2,955. On the upside, immediate resistance is $3,045 (an all-time high).
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Saqib Iqbal
