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Gold Rush Continues As Commodity Hits New ATH

Gold prices hit new all-time highs on Thursday, as investors’ appetite for the precious metal returned after Wednesday’s Fed interest rate announcement. The yellow metal traded at $2200 per ounce at the spot market and $2201 at the futures market, breaking a psychological barrier that ended its 10-day winning streak 10 days ago.

XAUUSD is likely to continue its upside, as US Treasury yields have fallen in the aftermath of the Fed interest rate announcement. US Treasury yields and gold prices have an inverse relationship as they are largely considered substitute assets.

Nonetheless, the Fed’s decision to retain interest rates in the 5.25-5.50% range will continue supporting the dollar. However, gold currently has the upper hand in the medium term after the Fed confirmed that it expects at least 3 rate cuts in 2024.  Gold’s gains from the dovish forecast could, however, be curtailed by US 2024 GDP projections, which the Fed revised upwards from 1.4% to 2.1%.

XAUUSD will get new volatility when the US initial jobs claims and Philadelphia Manufacturing Index readings come out on Thursday. However, traders will take these readings in the broader context of the interest rate decision. Therefore, marginal variations from the forecast figures are unlikely to change gold’s current upward trajectory. Also, gold will receive some support from the Eurozone manufacturing PMI, which declined to 45.7 from 46.5, which missed the 47.0 forecast figure.

Technical analysis

Gold price will maintain the upside if the buyers manage to keep it above 2192. That could build the momentum to breach the resistance at 2222, and potentially take a shot at 2235. However, a move below the pivot 2192 level will hand over control to sellers. The resultant downward momentum will attempt breaking the support at 2178. A move below that mark will bring the 2165 support within reach.