Technical & Fundamental Analysis By PapaFinanceTalk 07/03/2024

7 Mar

Gold Surges to Record High :
Technical & Fundamental Analysis Summary By PapaFinanceTalk

Key Takeaways:
- Gold prices reach an all-time high on expectations of a June Fed rate cut.
- Additional factors include geopolitical risks and China's economic woes.
- Fed Chair Jerome Powell signals the possibility of a June rate cut.
- Market anticipates a 70% chance of a June Fed rate cut, pushing 10-year U.S. Treasury yields to a one-month low.

Deeper Analysis of the Impact:
- Uncertainty surrounding the Fed's rate cut decision weighs on the dollar and propels gold prices to an all-time high.
- The attack on a tanker off the coast of Yemen (Red Sea) further heightens concerns about Middle Eastern tensions, benefiting gold's safe-haven appeal.
- Markets await U.S. unemployment figures on Friday and the Fed Chair's second testimony.

Key Information:
Minneapolis Fed President Neel Kashkari believes the Fed could cut rates twice in 2024, but stronger economic data could lead to a single rate cut.



Outlook:
- Gold prices are likely to rise to the 2180 area or the 161.8% Fibonacci level, followed by technical selling pressure for a retracement. However, the 1D timeframe still shows a strong uptrend.
- Based on historical data, the nonfarm payrolls data to be released on Friday is expected to be high, which could be a significant factor causing gold prices to plummet sharply this weekend. Investors should exercise caution.

Additional Analysis:
- The recent surge in gold prices is a continuation of the upward trend that began in early 2023.
- The bullish sentiment is supported by several factors, including:
1. The ongoing Russia-Ukraine war, which has raised geopolitical uncertainty and risk aversion.
2. Rising inflation, which has eroded the purchasing power of fiat currencies and increased the demand for safe-haven assets.
3. The accommodative monetary policies of major central banks, which have kept interest rates low and supported asset prices.

However, there are also some risks that could weigh on gold prices in the near term:
- A stronger U.S. dollar, which could make gold more expensive for foreign buyers.
- A rise in real interest rates, which could reduce the appeal of gold as a non-yielding asset.
- A de-escalation of the Russia-Ukraine war, which could reduce safe-haven demand.
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Disclaimer:
This content is for informational purposes only and does not constitute investment advice. Investors should conduct thorough research before making investment decisions. Past performance does not guarantee future results. Investing involves risk, and investors may lose their investment capital.