Forecast on Gold Price: Uptrend in Gold as Traders Buy the Dip
Traders buy when prices go down, pushing gold up. This is because the Initial data showed that fewer Americans are applying for unemployment benefits than experts had thought. This caused a drop.
The gold has reached a daily high of $1,982 so far today. For investors, lower interest rates are good news for Gold because the precious metal doesn’t offer a return like cash or other similar investments.
Employment data decreases gold price
In the US, the number of people applying for unemployment benefits increased by 1.69 million in the week ending March 17. This was different from what was expected. (1.701M).
Statistics show that the job market performs better than experts thought. Because of this, inflation could go up. And the Federal Reserve might have to raise interest rates faster than the dovish tone of the FOMC meeting on Wednesday would suggest.
Gold traders should keep an eye on the US Durable Goods Orders report, which shows how much money was spent on high-priced goods in the United States. This information will be shared with the world on March 24 at 12:30 GMT.
Compared to January, when it decreased by 4.5%, it is expected to increase by 0.6% MoM in February.
Investors will also be interested in the core number based on Durable Goods, Ex Transportation and Durable Goods Ex Defense. The first and second are both expected to go up by 0.0%.
Why the trend is in favour of bulls?
From a technical point of view, the uptrend that began at the beginning of March is still going strong.
The price will likely continue because “the trend is your friend.” If the current bar’s high, which is $1,984, is broken, it will show that the price will keep going up.
Buyers will likely face initial resistance at $1,991, where the trendline was broken. Gold prices could still go up to $2,009, the year’s high, if they don’t fall below $1,830.
Senior FXStreet analyst Dhwani Mehta thinks that after the gold forms a bullish continuation pattern, it will return to $2,000 again. The pattern would be confirmed if the daily candlestick closed above the $1,975 falling trendline resistance.
If the market manages to break out to the upside, it will first try to retest Tuesday’s high at $1,985, and if that holds, it will try to break the psychological $2,000 barrier.
On the other hand, Mehta says, “If Gold bulls fail to hold at higher levels, any retracements could push the intraday low at $1,965, below which the static support at $1,960 will be threatened.”
Lower prices could then show the $1,950 demand area, allowing a test of the falling trendline support at $1,926.
Bottom line
Data shows that the US economy is still strong will be essential for Gold. If growth is stronger than expected and the jobs report on Thursday is good, the Federal Reserve may need to raise interest rates even more to fight inflation.
We’ve already established that this is bad for Gold. If new information goes against what the market expects, gold prices will likely increase.
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