Gold price skyrockets past the $3,000 figure and hit a record high of $3,038 on Tuesday amid uncertainty on United States (US) President Donald Trump’s reciprocal tariffs to be enacted on April 2, while traders eye Federal Reserve’s (Fed) monetary policy decision. XAU/USD is trading at $3,037, up by 1.20%.
Risk appetite remains deteriorated, even though talks between Trump and Russian President Vladimir Putin relieved some of traders’ stress with the latter agreeing to a 30-day halt on attacking Ukraine energy facilities, according to Reuters. Nevertheless, the Bullion rally continued with the precious metal gaining over 15% in the year so far.
Hostilities in the Middle East between Israel and Hamas sparked a leg-up in XAU/USD, as Israel strikes killed more than 400 people in Gaza, threatening a two-month ceasefire, revealed Reuters.
Data-wise, the US economic schedule revealed that Industrial Production improved in February. Contrarily, housing data was mixed, with Building Permits falling off the cliff, while Housing Starts rose sharply, revealed the US Census Bureau.
According to the CME Group's FedWatch Tool, traders expect the Fed to keep interest rates unchanged on Wednesday. However, they see nearly a 66% chance of a rate cut in June.
In the meantime, Bullion continued to climb, sponsored by falling US Treasury yields and a weaker US Dollar. The US 10-year T-note yield drops one basis point to 4.183%. At the same time, the US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, falls 0.17% to 103.23.
Gold price is upward biased, poised to challenge higher prices above the current YTD high of $3,038. If buyers clear the latter, they could test $3,050 and $3,100 figures. It’s worth noting that the Relative Strength Index (RSI) is overbought. But the strength of the trend hints that the “most extreme” reading would be 80; hence XAU/USD could continue to trend higher.
Conversely, if Bullion drops below $3,000, the first support would be the February 20 daily high at $2,954, followed by the $2,900 mark.
The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).
Read more.Next release: Wed Mar 19, 2025 18:00
Frequency: Irregular
Consensus: 4.5%
Previous: 4.5%
Source: Federal Reserve
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