Fundamental analysis XAUUSD for 22.02.2024

Traders and analysts follow the actions of the Federal Reserve and global economic indicators, and recent trading shows that gold prices are influenced by many factors. 

Initially, the gold price settled in line with expectations as markets digested the Federal Open Market Committee meeting minutes and looked for direction. The calm came after Federal Reserve Chairman Jerome Powell boosted expectations by saying he would cut interest rates. Traders, given the strength of the U.S. economy and concerns about rising inflation, abandoned hope that discussions of an interest rate hike would begin. Better-than-expected inflation data points to lingering concerns about inflation and suggests that the Fed's war is far from over. This uncertainty has led to revised rate cut expectations, further reducing the likelihood of monetary policy easing in March or May. 

GSC Commodity Intelligence analysis shows that the projected rate cut has been pushed back to June, and the rate cut in 2024 will be smaller than previously thought. This view is also shared by former US Treasury Secretary Lawrence Summers and some major financial institutions, and there is growing speculation that the Fed's next move will be to raise interest rates rather than cut them. Despite the hawkish signs, gold prices were supported by a weaker dollar and increased risk appetite during the Asian session. As stated in the minutes of the January meeting, the Fed's stance on keeping interest rates high for an extended period of time reflects the Fed's caution in the face of rising inflation and a strong economy. While expectations of a rate cut in the near term have eased, this demonstrates gold's strength as a safe-haven asset amid global economic growth challenges and geopolitical tensions. 

The dynamic between a weak US dollar and the risk of rising interest rates has created a volatile environment in which gold prices can fluctuate within a certain range. However, gold's position is strengthening, supported by geopolitical uncertainty, and it is in a localized uptrend. As the market continues to react to these conflicting signals, the focus will remain on closely monitoring economic indicators and Fed communications to clarify the future direction of monetary policy. Given the current bullish bias indicated by the Alligator, the main scenario leans towards buying on a break above resistance levels. However, traders should remain vigilant for signs of reversal or weakening trend strength.

Technical Analysis and Scenarios:

The Alligator's hungry state with its jaw below the lips and teeth indicates that the market is in a strong uptrend. This condition means that buyers are currently dominating the market. Awesome Oscillator (AO) and Accelerator Oscillator (AC): Being in the gray zone and showing divergence, both do not give a clear direction. However, the underlying trend indicated by the Alligator suggests that the divergence may temporarily pause the trend rather than reverse it. 

Main scenario (BUY)

Recommended entry level: 2042.00

Take Profit: 2055.00

Stop Loss: 2035.00

Alternative scenario (SELL)

Recommended entry level: 2012.00

Take Profit: 2000.00

Stop loss: 2017.00