The price of a troy ounce of gold climbed to 2330.00 USD on Friday. This surge was driven by investors’ ongoing evaluation of the potential direction of the US Federal Reserve’s monetary policy following mixed macroeconomic data.
The US GDP for Q1 did not meet expectations, marking the slowest recovery in two years. The economy expanded by only 1.6%, significantly lower than the forecasted 2.5%. In contrast, GDP growth in Q4 2023 reached 3.4%. The Fed’s consensus forecast for 2024 expects economic growth of 2.1%.
The underwhelming economic performance might prompt the Fed to consider a reduction in interest rates. However, a localised acceleration in consumer inflation suggests that monetary policy might remain restrictive for longer.
As long as interest rates remain high, gold’s appeal as an investment option is somewhat diminished since it does not generate its yield as bonds do. Nonetheless, in times of rising inflation, gold increasingly becomes a valuable hedge against currency devaluation.
Today, the stock exchange will focus on the March Core PCE figures. These data are expected to provide further insights into the Federal Reserve’s monetary policy outlook.
Technical analysis of XAU/USD
On the H4 chart of XAU/USD, a consolidation range has formed above 2346.00, with the ongoing development of the third wave of decline aiming for 2262.22. The local target for this wave at 2296.96 has been reached. Today, a corrective move towards 2346.00 is expected, followed by an anticipated further decline to 2262.22. This bearish scenario is supported technically by the MACD indicator, whose signal line is below zero and is trending downwards towards new lows.
On the H1 chart, the corrective movement towards 2346.00 (testing from below) is continuing. Once completed, a new downward wave towards 2277.00 is expected, potentially reaching 2262.22. This outlook is confirmed by the Stochastic oscillator, with its signal line currently above 80 but poised for a decline towards 20.
