Gold price is experiencing a rise on Thursday, reversing part of its previous day’s decline. The US Dollar is being sold off due to bets that the Federal Reserve won’t raise rates further, which is supporting the Gold price. However, for further gains, the Gold price needs to move past the $2,010 resistance. The recent repeated failures near this barrier make it important for investors to wait for strong buying before positioning for further upward movement. The continued support from the Federal Reserve, which is expected to keep rates unchanged for the time being, suggests that any declines in the Gold price might still be seen as buying opportunities and are likely to be limited.
The hawkish FOMC minutes-inspired USD recovery is faltering due to expectations that the Federal Reserve will not hike rates further. Other economic data, such as labor market data and consumer sentiment, are also impacting the market. The lighter trading volume due to the US Thanksgiving holiday and repeated failures ahead of the $2,010 level warrant caution for bullish traders. From a technical analysis perspective, any move beyond the $2,000 mark might face resistance near the $2,007 area, and any further positive movement might lead to a breakout through the $2,009-2,010 barrier.
The Fed’s monetary policy in the US shapes the market, and the Federal Reserve holds eight policy meetings a year to assess economic conditions and make decisions. If inflation is rising too quickly, the Fed raises interest rates, making the US Dollar stronger. On the other hand, if inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the US Dollar. In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE), which usually weakens the US Dollar. Additionally, the reverse process of QE, known as Quantitative Tightening (QT), is usually positive for the value of the US Dollar.
