Fundamental Analysis XAU/USD

Some market participants appear confident that the U.S. Federal Reserve will begin lowering interest rates in the next period. This has led to lower US Treasury yields, putting pressure on the US dollar (USD) and providing some support for gold prices. Overall cautious market sentiment coupled with China's economic challenges could help limit the downside for gold. Investors are now awaiting the release of the annual weekly new jobless claims data from the US and are keeping an eye on Fed Chairman Jerome Powell's upcoming speech.

Despite the difficulties, gold prices were able to avoid significant continued selling during Asian trading on Thursday, mainly due to a slight decline in the US dollar.

Additionally, the benchmark 10-year Treasury yield remains near its lowest level in more than a month, putting downward pressure on the dollar and limiting losses for gold. It's worth noting that Fed officials are leaving the door open to further tightening of monetary policy. However, the CME FedWatch tool shows there is only an 18% chance of a rate cut as early as March.

Various Fed officials have expressed differing views on monetary policy, with some viewing current policy as sufficiently restrictive for price stability and others questioning its adequacy given the resilience of the U.S. economy. Some people watch. The focus remains on how to maintain high interest rates, with further interest rate hikes within this year being discussed.

The Fed's stance remains uncertain, and market participants are eagerly awaiting Chairman Powell's speech. Several Fed officials stressed that U.S. interest rates are likely to remain high for an extended period of time and cautioned against expectations for early rate cuts. Factors such as rising inflation and the resilience of the U.S. economy could lead to further rate hikes this year.

Technical analysis and scenarios

A wide-open alligator mouth with the jaw (blue line) well above the lips and teeth (green and red lines) indicates a strong downtrend. This indicates the presence of bearish momentum. Both oscillators in the red zone indicate rising bearish momentum and further emphasize the potential for a downward move. Given the strong bearish signals from Alligator, AO and AC, the main outlook is leaning towards the downside.

Main scenario (SELL)

Recommended entry level: 1945.00.

Take Profit: 1935.00.

Stop-loss: 1955.00.

 Alternative scenario (BUY)

Recommended entry level: 1955.00.

Take profit: 1965.00.

Stop loss: 1945.00.