Gold Price Forecast: Cautious Trade Ahead Of The US Holiday, Fed Minutes

(CTN News) – Despite a U.S. federal holiday on Tuesday, gold prices on the Comex remained unchanged, with trading activity being thin due to the holiday.

It was eagerly anticipated by traders that the U.S. Federal Reserve’s minutes from the June meeting would be released on Wednesday in order to gain insight into how interest rates will likely be raised in the future.

At present, gold is facing a number of headwinds, including expectations of more tightening measures, liquidity withdrawals, and elevated rates for an extended period of time.

There is a consensus among investors that there will be a 25-basis-point hike in July, pushing interest rates to the 5.25%-5.50% range, before predicting a cut after March 2024. Investing in non-yielding gold is discouraged by the high interest rates at present.

The dollar index, on the other hand, remained stable throughout the year, which made it difficult for gold prices to find direction.

In June, the U.S. manufacturing data showed a further decline, reaching its lowest level since May 2020, at its lowest level since March 2016.

The price pressures have eased due to significant improvements in the supply chain and lower borrowing costs which have dampened demand, resulting in a reduction in price pressures.

Gold Price Traders Await Fed’s Insights

For additional insight into the Fed’s interest rate policy, market participants will closely monitor the release of the minutes from the Federal Open Market Committee meeting on June 13-14 on Wednesday.

Despite the possibility that gold prices may recover to a range of $1,943 to $1,949 before potentially falling further, the prevailing rate environment continues to exert significant downward pressure.

Short-Term Outlook: Waiting for Guidance

A U.S. holiday on Tuesday resulted in thin trading activity for gold prices. Now that the minutes of the Fed’s meeting have been released, the focus shifts to them.

As a result, future interest rate hikes may be guided by this report. Non-yielding gold is less attractive due to the expectation of tighter monetary policy and higher rates.

In addition, the stable dollar index and subdued demand due to higher borrowing costs have influenced market sentiment. Traders will closely monitor the minutes for any indications that could have a short-term impact on gold prices.

Technical Analysis

According to the Comex Gold market, the current 4-hour price of 1931.10 has surpassed the previous close of 1929.30.

The price remains below the 200-4H moving average at 1957.70, but it is above the 50-4H moving average at 1926.50. RSI reading of 56.62 indicates a relatively neutral market outlook.

There is a significant support area between 1889.50 and 1899.80, while there is a significant resistance area between 1943.20 and 1949.00.

In general, the market sentiment for Comex Gold is relatively neutral, with traders closely monitoring price action to determine further direction.

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