Will gold prices rise again?
What Are Markets Expecting from the Federal Reserve Meeting?
Markets are closely watching this week’s Federal Reserve meeting, where the central bank is expected to keep interest rates unchanged at 4.5%. Alongside its rate decision, the Fed will release updated projections for U.S. economic growth, inflation, and unemployment in both the short and long term. Additionally, the meeting will include a dot plot outlining policymakers’ expectations for interest rate changes over the current year and the next two years.
Traders will also tune into Federal Reserve Chairman Jerome Powell’s press conference, where he will provide insights into the central bank’s outlook on the U.S. economy and reaffirm its commitment to maintaining price stability by keeping inflation near the 2% target while minimizing unemployment. Powell is also expected to offer further clarity on the Fed’s monetary policy approach for the coming period.
The next meeting of the Federal Reserve?
What Could Prompt the Federal Reserve to Adjust Its Policy?
At the January Federal Open Market Committee meeting, Federal Reserve Chairman Jerome Powell signaled no urgency to cut interest rates, considering inflation and labor market conditions back then. His stance was further reinforced by expectations that the Trump administration would tighten immigration policies and push for tax cuts, both of which could drive inflation higher and limit the Fed’s flexibility to ease policy. As a result, market expectations for any changes to the Fed’s monetary policy in the first quarter of this year have significantly diminished.
However, the impact of President Trump’s tariffs, public sector layoffs, and contract terminations for private sector workers in government is likely to weigh heavily on GDP growth. These factors have recently dampened market sentiment, contributing to a sharp decline in stock prices. While the Federal Reserve does not directly target equity markets, it cannot ignore these declines, which may increase pressure to begin a cycle of rate cuts in the second half of the year to stimulate economic growth.
Notably, both U.S. stocks and the dollar have erased all gains made since Trump’s election, while gold has surged to historic highs, recently surpassing $3,000 per ounce for the first time.
Gold Price at Record Highs
Gold prices continued their rally today, maintaining levels above $3,000/oz. Currently, prices are testing the bullish trendline that extends from the January 6 low. A break above this line signals the potential for further upward movement toward the high end of the current trading range, which lies between 3,000 and 3,100. Additionally, sustained trading above the 3,000 level serves as a further indication of the likelihood of prices advancing toward the high end of the mentioned range.
Key Levels in the Bearish Scenario
Conversely, if prices fail to hold above the rising trend line and close below the low end of the trading range at 3,000, this could signal a weakening uptrend as some speculators exit their bullish positions. In this case, a pullback toward 2,900 becomes a possibility. Additionally, a decline in the Relative Strength Index (RSI) below 70 would indicate a loss of bullish momentum, further supporting the potential for a price drop.
Gold price – Daily Chart
