Gold prices have been slipping as global markets brace for key decisions from central banks regarding interest rates. The recent rally in gold, which peaked at $2,203 on March 8th, has stalled, with prices grinding lower as investors await announcements from major central banks.
The Bank of Japan (BOJ) has raised its rates, while the Royal Bank of Australia (RBA) has chosen to keep its rates unchanged, signaling a potential end to the rate hike cycle. The European Central Bank (ECB) is considering lowering rates due to a slowing economy. The Federal Open Market Committee (FOMC) meeting, scheduled for tomorrow, is expected to keep rates steady, but investors will closely watch the statements and economic forecasts during the press conference for hints about future trends.
Technically, the weekly gold chart shows a bullish pattern, with prices breaking out of a multi-year trading range. However, the extended rally may require a correction before resuming its uptrend. The Commitment of Traders (COT) report indicates that managed money traders are heavily positioned long, potentially setting the stage for a near-term sell-off.
Seasonally, gold typically experiences a corrective window from late February to mid-March, followed by an uptrend. Historical data from the Moore Research Center, Inc. (MRCI) suggests a seasonal buy opportunity, with gold often closing higher in mid-April compared to late March.
The upcoming FOMC meeting and Chairman Powell’s remarks will likely dictate short-term market direction, with volatility expected in response to the Fed’s tone on future interest rate decisions. While seasonal patterns can provide insights, traders should consider other technical and fundamental indicators, as well as risk management strategies, before making trading decisions.
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