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Following the US Federal Reserve’s meeting last Wednesday, the Fed’s officials did not exclude the possibility of switching to a looser monetary policy, even though a decline in inflation had not been confirmed yet.
Moreover, the US dollar weakened sharply right after the Fed’s meeting. However, it strengthened just as drastically the very next day, and the XAUUSD’s value dropped from the record high near 2,222.00 reached the day before. Despite this, technical and fundamental analyses indicate that XAUUSD may resume growth.
The article covers the following subjects:
Key takeaways
- The gold price reached new record highs above $2,220.00 a troy ounce.
- Important macrostatistics will unlikely be released in the last week of March. Moreover, they will be shorter than usual.
- Investors will probably be busy summing up the results.
- To push upwards, gold buyers need new drivers.
Key fundamentals & events impact on Gold price
Although analysts believe the rise in gold prices has been unreasonably strong, there is no reason to expect any significant correction shortly. Moreover, the gold price may grow up to new resistance levels.
Investors are forced to build up long positions in gold, looking for a “refuge” from possible shocks on the back of the dovish attitude of the Fed governors and other central banks, market nervousness amid global geopolitical tensions, and the upcoming presidential elections in the United States.
Also, note that US government bond yields continue to decline. It often happens amid expectations that the Federal Reserve will loosen monetary policy by introducing QE or cutting interest rates.
The fall in US treasury yields almost directly correlates with the rise in their price, indicating ongoing demand for protective assets, including gold. Gold does not produce investment income, but monetary policy easing helps reduce purchasing and storing costs and, consequently, increases demand for it.
Market participants expect the Fed to cut interest rates at least three times this year and once or twice more next year.
XAUUSD Technical analysis
The XAUUSD pair was close to 2,222.00 from 18.03.2024 to 24.03.2024, updating the all-time high of 2,195.00 reached two weeks earlier.
However, the US dollar resumed growth at the end of the week and stopped the gold price from climbing higher. As a result, despite having set a new record, the gold rate had to drop to 2,164.00 by week’s end, 140 points lower than the closing price of the first week of the month.
At the same time, the RSI, OsMA, and Stochastic technical indicators are still on the buyer’s side in the weekly chart. The daily chart looks controversial, though: the RSI is in the buying area while OsMA and Stochastic are on the seller’s side, signalling an upcoming correction.
In the short term, the RSI, OsMA, and Stochastic indicators suggest short positions. That said, the XAUUSD plunged to an important short-term support level of 2,164.00 (MA-200). Technically, breaking through that level can be the first signal of a bearish correction, while breaking local support at 2,146.00 may be its confirmation. The targets will be at support 2,107.00 (ЕМА-200 in the H4 chart) and 2,090.00 (ЕМА-50 in the daily chart).
It is worth noting that technical analysis is often less accurate than fundamental analysis, like in our situation. The corrective downward momentum is expected to weaken in the main scenario, and the price of gold and the XAUUSD may resume growth. The support zone near 2,164.00 and 2,146.00 may give rise to a new “bullish” impulse. If our assumption is correct, pending limit orders to buy the XAUUSD should be placed near the support levels of 2,164.00 and 2,146.00, with stop orders below 2,140.00.
A breakout of local resistance at 2,185.00 and 2,195.00 will be a confirming signal.
The XAUUSD pair is above key support at 2,002.00 (ЕМА-200 in the daily chart) and 1,992.00 (ЕМА-50 in the weekly chart), i.e. in the medium-term bullish market area. The XAUUSD pair is above key support at 1,830.00 (ЕМА-200 in the weekly chart) and 1,820.00 (ЕМА-50 in the monthly chart), i.e. in the long-term bullish market area. The XAUUSD pair is above key support at 1,530.00 (ЕМА-144 in the monthly chart) and 1,400.00 (ЕМА-200 in the monthly chart), i.e. in the global bullish market area. Thus, the right decision will be to look for entry points to go long in the XAUUSD.
Weekly trading plan for gold
Gold remains in high demand. The strategic target of 3,000.00 no longer seems as far away as at the beginning of the year or at the beginning of this month. Based on the above fundamental factors, we can expect positive dynamics to continue at a minimum and to set new price records at a maximum.
How to trade XAUUSD: Trading Scenarios this week
The uptrend is expected to continue, not excluding a correction ahead of a new upward jump.
Main scenario
The main scenario suggests long positions.
Aggressively:
- Buy by Market; Stop Loss 2,159.00.
Moderately:
- Buy Stop 2,197.00, 2,200.00, 2,223.00.
- Buy Limit 2,160.00. Stop Loss 2,143.00.
- Buy Limit 2,147.00. Stop Loss 2,132.00.
- Buy Limit 2,110.00. Stop Loss 2,090.00.
- Buy Limit 2,095.00. Stop Loss 2,080.00.
Targets: 2,200.00, 2,210.00, 2,220.00, 2,225.00, 2,250.00, 2,300.00, 2,400.00, 2,500.00.
Alternative scenario
If an alternative scenario plays out, a breakout of support at 2,164.00 and 2,146.00 will provoke a further corrective decline to support near 2,100.00. If the price does not pull back there, the XAUUSD may drop to the key levels of 2,002.00, 2,000.00, and 1,992.00 after breaking the important support level of 2,090.00. If those key levels are broken out, the XAUUSD will be headed for the medium-term bearish market zone.
Aggressively:
- Sell Stop 2,159.00. Stop Loss 2,187.00.
Moderately:
- Sell Stop 2,140.00. Stop Loss 2,176.00.
Targets: 2,110.00, 2,100.00, 2,095.00, 2,090.00, 2,025.00, 2,005.00, 2,000.00, 1,992.00
How to trade XAUUSD spot gold based on today’s NFP data
US labor market data, inflation, and GDP are critical indicators the Fed uses when making monetary policy decisions. A particularly important economic indicator is NFP (Non-Farm Payrolls) — the number of jobs outside the agricultural sector. It affects the dollar rate and, consequently, the price of gold. Trading strategies based on this report usually suggest buying or selling the dollar.
If NFP data comes in above expectations and strengthens the dollar, the gold price may decline. In this case, we can open short positions in the XAUUSD. If NFP data are worse than forecasts and previous values, we can consider taking long positions in gold. It is worth noting that trading NFP data can be risky but highly remunerative.
The March report from the US Department of Labor showed employment outside the agricultural sector increased by +275 thousand jobs in February. Still, the dollar came under pressure after this publication. Investors could have grown wary of the unemployment rise to 3.9% in February (compared to 3.7% in January) and the revision of previous NFP data for January from +353 thousand to +229 thousand.
At the same time, other fundamental factors must be considered when making trading decisions based on NFP: the general trends of the dollar and the market, macrostatistics, the level of investors’ risk appetite, how soft the current Fed monetary policy is, and others.
The dollar is strengthening its market position at the beginning of the week ending 31.03.2024. Consider this fact when making trading decisions. The next publication of the US Department of Labor’s monthly report is scheduled for 05.04.2024.
XAUUSD buy/sell target zones:
| Buy | Sell | ||
|---|---|---|---|
| L1 | 2,185.00 | S1 | 2,150.00 |
| L2 | 2,195.00 | S2 | 2,140.00 |
| L3 | 2,200.00 | S3 | 2,110.00 |
| L4 | 2,220.00 | S4 | 2,100.00 |
| L5 | 2,250.00 | S5 | 2,090.00 |
| L6 | 2,300.00 | S6 | 2,070.00 |
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Conclusion: XAUUSD Forecast for this week
The trading week ending 31 March will be shorter than usual, as Catholic countries will celebrate Easter on 31 March. Banks and exchanges will not work. It will also be the last week of the month and the first quarter. Investors will make overall assessments, and there will be few important data releases, except the final estimate of US GDP for Q4 and the Core Price Index.
The current market dynamics will likely continue next week, meaning the XAUUSD will continue trending upward even if a correction occurs.
The main scenario suggests new local highs above 2,220.00 or hovering between 2,145.00 and 2,200.00 or 2,195.00 and 2,222.00.
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Price chart of XAUUSD in real time mode
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