Gold stands at the back foot, awaiting fresh signals from Fed
Gold price eases for the second straight day after repeated failure at pivotal Fibo barrier at $1986 (50% retracement of $2080/$1892), deflated by stronger dollar on renewed uncertainty about US rate outlook.
The US Federal Reserve initially signaled that the cycle of sharp rate hikes in past over one year is likely to end soon, with 25 basis points hike in July probably to be the last and also hinted that may start cutting rates sometime in early 2024.
This lifted metal’s price to the highest in 1 ½ months, but the sentiment was cooled after solid jobs data pointed to still tight labor market, which raised question whether the Fed should stop hiking or to possibly postpone the decision and leave the door open for further tightening, since the economy remains resilient despite high borrowing cost.
Two scenarios are at the table – the first one for prolonged tightening, which would add fresh support to dollar and continue to deflate gold price and the second, in which the Fed may give stronger signals about end of rate hikes, which would send metal’s price through psychological $2000 barrier.
Res: 1973; 1987; 2000; 2008
Sup: 1957; 1951; 1940; 1929