Where to next, for Gold?
Federal Reserve Chair Jerome Powell vowed to "keep at" their battle to beat down inflation, as the U.S. central bank hiked interest rates by three-quarters of a percentage point for a third straight time and signaled that borrowing costs would keep rising this year. The Fed foresees its policy rate rising at a faster pace and to a higher level than expected, the economy slowing to a crawl, and unemployment rising to a degree historically associated with recessions.
The Fed's target policy rate is now at its highest level since 2008 - and new projections show it rising to the 4.25%-4.50% range by the end of this year and ending 2023 at 4.50%-4.75%. The dollar hit a fresh two-decade high against a basket of currencies, gaining more than 1%. The U.S. currency's strength - it has appreciated by more than 16% on a year-to-date basis.
So question now is what is going to happen to the Dollar?
Given the current set up, on the longer timeframe, I think it should be considered in a range now. XAUUSD could go either ways now to be honest. This is because 1. Should a "True" Recession happen, gold will definitely rise 2. Should the impact and "intensity" of the rate hikes over power that of this said recession, gold will fall.
For now in the short run, I would take short positions in gold, at least till there is true real economic data showing a slowdown in economy (especially in the property market), the slowdown in labour market - increase in unemployment, then yes, I think then I would take long positions on the gold.
However, I would continue to monitor the technical indicators to see when to enter the market.
The Fed's target policy rate is now at its highest level since 2008 - and new projections show it rising to the 4.25%-4.50% range by the end of this year and ending 2023 at 4.50%-4.75%. The dollar hit a fresh two-decade high against a basket of currencies, gaining more than 1%. The U.S. currency's strength - it has appreciated by more than 16% on a year-to-date basis.
So question now is what is going to happen to the Dollar?
Given the current set up, on the longer timeframe, I think it should be considered in a range now. XAUUSD could go either ways now to be honest. This is because 1. Should a "True" Recession happen, gold will definitely rise 2. Should the impact and "intensity" of the rate hikes over power that of this said recession, gold will fall.
For now in the short run, I would take short positions in gold, at least till there is true real economic data showing a slowdown in economy (especially in the property market), the slowdown in labour market - increase in unemployment, then yes, I think then I would take long positions on the gold.
However, I would continue to monitor the technical indicators to see when to enter the market.
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