Gold Under Pressure As Fed Backs Away

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Gold Under Pressure As Fed Backs Away

Gold Under Pressure As Fed Backs Away From March'S Rate Cut

Gold (XAU/USD) prices show that bears dominated Thursday's session & increased due to the Fed's decision. The market was rife with rumours of a March rate cut, but the Fed's chair has made their stance of 'no rate cuts' clear once again.

According to the Fed's Powell, they are still unconvinced and are trying to convince people that the recent actions are enough to bring inflation under 2%. Now that the March rate cut is out of the way, investors are looking forward to the Fed's May meeting.

Inflation Remains The Key

One thing is clear: the Fed will only cut rates after looking at economic growth, consumer spending, the labour market, and the inflation rate. These factors will be examined before the Fed decides about its first rate cut in May 2024.

Now that the focus has shifted to May, which is still far away, the investors are not looking towards the PMI (Manufacturing) and the NFP report due tomorrow.

If tomorrow's NFP report shows strong wage growth & and employment numbers, the chances of May's rate cut will also become very slim. As the market awaits the upcoming data, the Gold price continues its descent as the outlook remains bearish.

However, the technical chart shows that the Gold market is still bullish, as the precious metal has just emerged from a symmetrical triangle pattern. Furthermore, the 20 EMA near $2032 provides dynamic support for the gold prices.

The RSI indicator is currently near the 60 level, which is a sign that bulls are still in the market. So, if we ignore the short-term selling in Gold, it becomes clear that a bullish breakout is still on the cards.

If the Fed makes any comments reaffirming the rate cuts in May, it could play well in favour of the spot Gold and futures contract.

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