On Tuesday (February 21), the international gold price fluctuated within a narrow range. Investors avoided large-scale positions before the release of the Federal Reserve meeting minutes and important economic data that may affect the Fed’s interest rate hike path. Gold prices are expected to fall below $1,828 again.
At 14:55 Beijing time, spot gold fell 0.10% to $1,839.42 an ounce; the main COMEX gold futures contract fell 0.12% to $1,848.0 an ounce; the U.S. dollar index rose 0.14% to 104.023.
Money markets now expect the Fed to raise rates above 5% in May, with rates peaking at 5.305% in July. Investors will next focus on the minutes of the Fed’s latest policy meeting to be released on Wednesday (February 22) and the January PCE price index to be released on Friday (February 24).
Gold prices have fallen about 6% since hitting their highest level since April 2022 at $1,959.57 an ounce earlier this month. Last week, they hit a low of $1,818.81 an ounce since late December. Concerns that interest rates will remain elevated for longer came after a flurry of data showed a resilient U.S. economy and a tight labor market.
Christopher Wong, foreign exchange strategist at OCBC Bank, said: “The market is assessing whether the re-betting on the Fed’s hawkish outlook is too fast, and the decline in gold prices has temporarily slowed down. Re-betting on further strengthening of the Fed requires finding new catalysts, and the focus will be on the core On the PCE. Stronger data could see the dollar’s rally gather momentum and weigh on gold; but an unexpected downturn in the data should lead to a pause in Fed hawks’ re-bets and gold could rally.”
In the last trading day, the price of gold hit $1,850 without success. Aside from the upside reversal of the Stochastic Oscillator, the RSI and MACD failed to show any meaningful reaction, with the former holding below the 50 neutral mark and the latter hovering in negative territory and around previous lows. With the price exiting the bullish channel and breaking below the 50-day simple moving average, sellers may continue to have the upper hand in the near term.
On the daily line, the price of gold is in the downward trend of wave II starting from $1960. It is expected to fall below $1828 again, and the market outlook is expected to further drop to $1788. They are the 38.2% Fibonacci retracement of the upward wave I level and the 50% Fibonacci retracement level. Both wave II and wave I are sub-waves of the upward (V) wave that started at $1615.