Gold Surges Amid FED Minutes Anticipation: Key Focus on XAU/USD Trading Pair
Gold has in the recent past enjoyed a rise which has crossed some barriers with traders waiting anxiously for the outcome of the minutes of the FED. Overall this has attached much focus on the trading pair of XAU/USD, as investors and analysts keep an eye on the precious metal and factors influencing its upward trajectory.
Recent Performance
In the last couple of weeks more specifically gold has presented an opposite trend to that of most bears having risen despite resistance levels that were imposed earlier to limit the metal’s gains. The XAU/USD or the spot gold has embarked on an upward journey mainly due to the instability in the world economy, conflicts around the globe, and changing trends.
Factors Influencing Gold Prices
Several key factors have contributed to the recent jump in gold prices:
- Inflation Concerns: The Ongoing inflation expectations have hit the investors’ sentiment as the investors look for the safest place for their money, and gold is the most common example of an inflation hedge. The recent information on the rates of inflation which have risen above the expected rates has also helped to push this trend.
- Dollar Weakness: Unlike other international currencies, the US dollar has devalued at some point making gold a good investment to foreigners. Gold is generally traded in USD and thus a decrease in dollar value normally pushes the prices of gold up.
- Federal Reserve Policies: The market is always concerned with the Monetary Policy set forth by the Federal Reserve System of the United States. The expectation of the Fed minutes has led to the formation of this speculative kind of market in which traders are searching for signals that would indicate further increases to the interest rate and the reduction in asset purchases.
Technical Analysis
Looking at the technique view, gold has cleared major resistance levels, which gives it a headline for further advancement. XAU/USD erased the $1900 level, a key mental point, and is set towards the $1950/$2000 areas.
Taking a look at the Relative Strength Index (RSI), the indicator is above the 50 level, specifically at 52.74, which indicates a strong bullish force. Looking at the moving averages has revealed that the 50-day and 200-day MA have bullish crossover adding further support to the bull picture.
Fed Minutes: Top 5 Things to Look For
Minutes of the Federal Reserve’s meeting are an essential release that gold traders await. Key points of interest include:
- Interest Rate Projections: Suggestions about more frequent increases in interest rates are also bearish for gold since higher rates decrease the carry or the cost of holding bullion, which yields no income.
- Tapering Timeline: The specifics of when and how fast the central bank’s asset purchases will be slowed down will be paid attention to. A faster tapering process could have a bearish impact on gold prices due to the improved leg power of the greenback.
- Economic Outlook: Understanding the direction concerning the status of the economic recovery and inflation trends, the Fed will formulate ways to change policy in the future. It is even possible that the price will return to the upward movement due to a dovish outlook.
Market Sentiment
The strategies-based investors’ sentiment is still somewhat positive; many investors still act gold as a Safe Haven investment in light of global and geopolitical risk factors. However, the market remains rather unpredictable, and therefore certain shocks or pieces of information may cause sharp fluctuations in the price trend.
Conclusion
Gold prices have recently moved above key benchmarks because of expectations of inflation, weakening of the dollar, and accumulation caused by a release of Fed minutes. Thus, the XAU/USD pair is in a condition to continue its recovery and achieve further improvement in the short term, as traders wait to look for additional clues from the Federal Reserve while the pair is sensitive to changes in the trends in the market and policies. Thus, following the economic indices and the Central Bank’s reports will become the essential strategy for investors as far as the gold market is highly unstable.
