Gold Oscillates at Highs, Powell's Speech Worths Attention

Peterson

Summary:

Today's oscillation range should be $2135 - $2178, and it is better to buy low and sell high.

SELL XAUUSD

Close Time

CLOSED

2178.00

Entry Price

2135.00

2183.00

4325.23 +105.61 +2.50%

50.0

Pips

Loss

2135.00

2183.00

Exit Price

2178.00

Entry Price

2183.00

Fundamentals

During Wednesday's (March 20th) Asian session, spot gold oscillated narrowly, and it is now trading at $2158.

In yesterday's Asian session, gold oscillated lower but in a small range because of the approaching March interest rate decision as well as Powell's speech. Then, both sides of the market were cautious. At the same time, the Bank of Japan (BOJ) raised interest rates again after 17 years but also gave up the negative interest rate policy that had been maintained for 8 years. Finally, the global interest rates are all back to positive. Actually, the negative interest rate itself is a kind of extremely unreasonable behavior, but fortunately, it is just for financial institutions' depository, the negative interest rate itself is a kind of extremely hooligan behavior. Fortunately, it is just for excess reserves from financial institutions that are deposited in the central bank. Over the years, did negative interest rates change the monetary deflation or the slow economic growth? Besides, thanks to the global capital flows since 2020, the BOJ reached the 2% inflation target in September 2022, and Japan is still one of the world's lowest inflation countries! In the end, negative interest rates are more of a way to keep capital from flowing in, and the exchange rate has depreciated from 120 to 151 now in 8 years.

For gold prices, the market's concern is more on how many rate cuts in the future, and the market expectation reduced by half to 3 times compared to the previous expectation. However, the price of gold is still high. Tonight, the March Fed interest rate decision is about to be released, and a dot plot and economic forecasts will be discussed as well, which may give trading guidelines. As long as the market does not get more favorable signals of easing (more than 3 times of rate cuts), the rise in gold price will be difficult to maintain. If the statement is hawkish, then the market may go to trade 2 rate cuts during the year, and the first rate cut in June may not be valid. Then, the retracement in gold may also be inevitable, but we do not look forward to too much for the time being, just let it be. I keep expecting that gold will retrace soon, but the retracement way is not yet confirmed. Then, it is possible to go short at highs with small positions. But at the same time, it is a good year for gold, and we should not expect a sharp drop in gold prices.

Yesterday, gold rebounded in a small V-shape from its lowest price of $2147 to its highest level of $2163. The oscillation was smaller compared to the pattern two days ago. As we recommended to trade in the range of $2140-$2178, there was no action to take yesterday.

News: Wall Street Journal reporter Nick Timiraos claimed that the Fed focuses more on whether a hard landing will happen in the U.S. economy than the number of rate cuts. Moreover, the BOJ announced a rate hike of 10 basis points, and the policy rate was revised from -0.1% - 0 % up to 0% -0.1%. It canceled the Treasury yield curve control (YCC) policy and will stop buying commercial paper and corporate bonds next year. Furthermore, the purchase of Japanese stocks ETF and real estate investment trusts (REITs) will also be suspended.

Today's focus: The Fed's interest rate decision and Powell's speech.

Technical Analysis

Gold once plunged to $2147 during the Asian session yesterday. Then, it rebounded with oscillations, once touching $2163, showing a similar trend compared to the pattern two days ago. Finally, the oscillation narrowed and the daily chart was closed with a bear candle. At present, gold is resistant to falling, and the bulls will stay above $2150 before the interest rate decision. As there will be significant news this evening, any technical analysis will be useless, and the oscillation will be more substantial. Therefore, investors should manage their position and stop chasing the ups and downs. Moreover, try to stick to the trading plan and wait for market signals.

Technically, the USDX closed higher yesterday, but it fell from highs, closing the daily chart with a long-upper-shadow. Accordingly, gold rebounded with a V-shape pattern, showing a strong trend. After a decline, the gold bears left as they were not confident to keep trading, and more momentum was needed. In addition, the MACD forms a golden cross and expands, and the bullish momentum keeps releasing. Moreover, it stays above the 60-day SMA, indicating that gold will keep an upward oscillating trend today. Thus, we should take a look at the resistance near $2165. In the 4H chart, the MACD sticks together and it forms a golden cross near the 0-axis, suggesting a powerful rebound later. In the daily chart, MACD tends to form a death cross at highs, and a retracement is likely to emerge in the middle and long term. Nevertheless, gold may also ascend and form a double-top pattern, and a smooth retracement will also appear. The trading range today will be $2135-$2178, where aggressive investors can buy low and sell high. Gold Oscillates at Highs, Powell's Speech Worths Attention_1

Gold Oscillates at Highs, Powell's Speech Worths Attention_1

Trading Recommendations

Trading direction: Short

Entry price: 2178

Target price: 2135

Stop loss: 2183

Support: 2140.000/2120.000

Resistance: 2165.000/2180.000

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Gold Oscillates at Highs, Powell's Speech Worths Attention

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