Following yesterday’s sell-off, spot gold attempts to recover and resume the ascent, with prices fail to show a robust bullish move since mid-February, when the current downside correction started. Since the start of the week, the yellow metal can’t regain the $1.320 mark which is the key obstacle for bulls now.
The local recovery attempts are limited by the $1.1318 level, and the bullion hasn’t recouped the yesterday’s losses yet. While the longer-term prospects for the market still look decent, the immediate risks are pointing to the downside. The precious metal could resume the bearish move, should the Fed hike rates today and signal a possibility of four hikes this year instead of three during the upcoming meeting. The new Fed governor Jerome Powell can give the markets some hawkish signals, as he did it in February. In this scenario, the greenback will appreciate across the board, which in will turn put gold under a bearish pressure. Meanwhile, the risk of a deeper sell-off in the medium term is rather low as long as spot gold keeps above the March low of $1.302.
By Helen Rush
Senior Analyst at Capital Markets