As Asian traders started a crucial week that included the US Federal Reserve’s monetary policy meeting on Tuesday and Wednesday, the price of gold (XAU/USD) was holding stable at around $1,675.
After data revealed demand for employees in the US remained strong, gold prices fell amid expectations of further aggressive interest rate raises by the Fed, Kitco News reported.
Retail sales were also reasonable, meaning the Fed would likely continue its cycle of tightening for some time, it added.
FX Street reported: “Gold prices are expected to remain volatile ahead of the interest rate decision by the Federal Reserve. Per the consensus, the Fed is expected to announce a third consecutive 75 basis points (bps) interest rate hike. However, doors are open for a higher rate as price pressures are needed to contain sooner.
“Meanwhile, the US dollar index (DXY) oscillates around the critical support of 109.50 as market veterans have slashed the US growth rates. Economists at Goldman Sachs have trimmed the growth forecasts for 2023.
“US Gross Domestic Product (GDP) is expected to increase by 1.1 per cent as Fed’s tightening path along with the current restrictive policy will prove less room for growth in the scale of economic activities.”
Meanwhile, US President Joe Biden said in a CBS 60 Minutes interview that “I’m more hopeful than I have been in a long time” regarding the state of the US economy and the Covid pandemic.
“I’m telling the American people that we’re gonna get control of inflation,” Bloomberg reported President Biden as saying in the interview.
FX Street reported cause for optimism for the global economy.
“On the same line are the Covid updates from China as it unlocks Dalian and Chengdu cities while witnessing zero coronavirus cases in Beijing and one, versus zero the previous day, outside Shanghai’s quarantine zone.”
Investors should note that the gold price is hovering below $1,700 based on one-day chart view and has already passed $1,680.
Therefore, with gold in a downtrend in the technical charts, playing between $1,680 to $1,650, investors should set a stop-loss function to protect their capital.