Reaching $2200, Just a New Starting Point

Winkelmann

Summary:

Gold hit a new high of $2200, signifying a fresh beginning.

BUY XAUUSD

Close Time

CLOSED

2200.00

Entry Price

2250.00

2178.00

4519.80 -94.56 -2.05%

220.0

Pips

Loss

2178.00

2177.98

Exit Price

2200.00

Entry Price

2250.00

Fundamentals

Recently, market expectations for rate cuts by the Federal Reserve have become uncertain due to the rebound in both the US CPI and PPI which indicate persistent inflation. Concerns arise that the number of rate cuts within the year may be fewer than three, causing gold to pull back when approaching the $2200 level.

However, yesterday's FOMC statement and the Fed's dot plot were almost identical to those of December last year. Committee members still anticipated three rate cuts in 2024. During the subsequent press conference, Powell hinted at potential rate cuts at an appropriate time this year and mentioned slowing down the pace of balance sheet reduction. These slightly dovish indications temporarily alleviated traders' worries. The probability of the first-rate cut occurring in June increased to 76% from less than 60% the previous day. As a result, gold surged again. Gold prices in this early Asian session extended the rally and reached a new historical high of $2223.

Looking at the previous trends of gold, the change in rate-cut expectations did not lead to significant selling pressure on gold. The pullback was limited, indicating that the bullish sentiment on gold remained but rather consolidated. It appears more like a consolidation phase before further upward movement. The outcome of this Fed meeting happened to provide a positive catalyst, propelling gold to new highs and continuing its extraordinary performance since March.

Gold's popularity is not solely attributed to the expectations of rate cuts by the Federal Reserve. Considering the years of rampant currency issuance by central banks worldwide, the seeds of high inflation have long been sown. Coupled with geopolitical uncertainties globally, gold may be the safest asset for value preservation in the future, without a doubt. Central banks have been increasing their gold reserves, diversifying their asset holdings.

Since gold crossed above the $2100 level smoothly, gold is entering a new phase where $2000 might just be the horizon or starting point. The past is long gone, and the future is limitless. Seize every opportunity to buy on dips.

Technical Analysis

Looking at the 4-hour chart, XAUUSD bulls are leading the trend. It surged following the Federal Reserve policy meeting, breaking through the previous downtrend line. Currently, it has consolidated above $2200, marking the beginning of a new phase. Although the short-term price of gold is overbought, considering the dominant advantage and momentum of bulls, it is not suitable for shorting at the moment.

Based on the Fibonacci extension levels, the gold price is expected to rise to the 200% extension level between 2245 and 2250 in the short term. It is advisable to go long on dips. The $2200 level still provides a short-term opportunity for entering a long position after a pullback.

Trading Recommendations

Trading Direction: Long

Entry Price: 2200

Target Price: 2250

Stop Loss: 2178

Support Levels: 2193/2180

Resistance Levels: 2225/2250

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