The XAU / USD pair is growing moderately during the trading session on Wednesday. Since the opening of the day, gold has added 0.3% and is trading at $ 1,736 per troy ounce.
The focus of traders' attention is the Fed meeting, the results of which will be summed up at 21:00 Moscow time. Considering that this event can have a significant impact on the US currency rate, traders prefer not to rush to open new positions. The main question, especially for gold, will be what the central bank's expectations are for interest rate hikes. Recall that the current yield on 10-year US government bonds is 60 basis points higher than at the time of the Fed's December meeting, which implies a rate hike in late 2022, although the central bank does not plan to tighten monetary policy until the end of 2023.
It is expected that the American regulator will not change the parameters of monetary policy, and will also reiterate its commitment to low interest rates for a long time. Earlier, central bank chairman Jerome Powell said on several occasions that the Fed will not wind down its quantitative easing program until the economy is on a sustainable trajectory of economic recovery. Judging by the latest macroeconomic reports, this has not happened yet. Retail sales slipped 3% in February, according to the US Department of Commerce. Economists had forecast a 0.5% decline. The data on industrial production, which fell 2.2% in February, was also disappointing. Experts believe that the main reason for such weak statistics lies in the abnormal February frosts,
Since the beginning of this year, gold has fallen in price by more than 8%, under pressure from the growth of the dollar, as well as sales in the Treasury market, which led to an increase in their yields. Higher bond yields increase the opportunity cost of owning gold and other non-guaranteed income assets. If the Fed today decides to use asset purchases to curb the growth of government bond yields, this could lead to an increase in the XAU / USD quotes.
XAU / USD BuyLimit 1720 TP 1820 SL 1695
Analytical reviews and comments to them reflect the subjective opinion of the authors and are not a recommendation for trading. Author Artem Deev is a trader analyst at AMarkets. The social network of forex traders is not responsible for possible losses in case of using AMarkets review materials
The content of this article is the solely private opinion of the author and may not coincide with the official position of the Forex social network Special. The materials published on this page are provided for informational purposes only and should not be construed as investment advice or advice for the purposes of Directive 2004/39 / EC.
FOREX FORECAST → How to make money on gold? Trading Ideas 03/24/2020: Should You Buy Gold?
FOREX FORECAST → Gold - how to make money? XAUUSD Trading Ideas Today 01/07/2020: Hedge Funds Buy in Gold!
FOREX FORECAST → How to make money on gold? Trading Ideas 02/19/2020: Should You Buy Gold?
FOREX FORECAST → How to make money on gold? Trading Ideas 11/27/2019: Will Gold Rise?
FOREX FORECAST → How to make money on gold? Trading ideas 12/26/2019: where does gold rise?