Gold Prices at $2,000 Amid Fed Rate Uncertainty

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The gold market experienced a slight pause, hovering around the $2,000 mark this week.

While it was expected that the Federal Reserve would maintain current interest rates, uncertainty remained regarding a potential rate increase in December.

Fed Chairman Jerome Powell provided some clarity, hinting at a pause in rate hikes.

This led to an 80% probability of a rate hike pause in December, a significant increase from last month’s 54%.


Gold Market Focus: Non-farm Payrolls and US Inflation:-

This evening, the market’s attention is fixated on the Non-farm payrolls data and the forthcoming US inflation figures, both carrying substantial significance.

A noteworthy shift in the market landscape this week revolves around the marked decrease in US Treasury yields.

The Treasury’s revelation of reduced bond issuance, combined with the release of some less-than-stellar US economic data, has exerted downward pressure on Treasury yields.

Central bank demand is the primary driving force behind the prices.

As of the end of the third quarter, central banks had acquired an unprecedented 800 tons of it, a fact substantiated by the latest data from the WGC.

The prognosis suggests that these acquisitions may reach or even surpass the record levels reported last year, according to the WGC.

Gold Market Analysis:-

Approximately 20 million ounces of it have exited global ETF markets, offset by central bank demand, preventing major price corrections.

Gold remains overbought, with an RSI_14 momentum oscillator near 70.

Historically, such overbought conditions precede price corrections, and even any rally tends to be short-lived.

The chart lacks a reversal signal, but it exhibits signs of exhaustion, suggesting a potential consolidation or correction.

A strong bullish catalyst would be necessary to push gold above $2,000.

Given the upcoming FOMC, it’s advisable to maintain light positions and await corrections before establishing new ones.

Even if the market rallies, exercise caution with strict stop-loss measures.

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It is currently in a temporary holding pattern around the $2,000 level, reflecting uncertainty about Federal Reserve rate hikes and the influence of reduced US Treasury yields.

Despite being a significant factor in supporting gold prices, central bank gold purchases could impede major corrections.

However, with gold in an overbought state and technical indicators suggesting potential consolidation or correction, caution is warranted.

Clarity may emerge after the upcoming FOMC meeting, and traders should remain alert to signs of a potential.


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