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Gold Price Rises Supported by Optimistic Monetary Policy Statements in the United States

The price of gold rose slightly during early trading this morning, Wednesday, December 20, as gold continued its gains supported by rising expectations of a shift in monetary policy in the United States of America after statements that can be described as optimistic from monetary policy makers in the United States of America over the course of this week.

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The most recent was from San Francisco Fed President Mary Daly to the Wall Street Journal who said that “interest rate cuts may be necessary next year to prevent excessive policy tightening.” She noted that it is reasonable for the bank to start cutting interest rates because inflation has shown improvement, adding that if inflation falls further, the Fed’s rate “will remain largely constrained, even if we cut interest rates three times next year.” She also said Daly says she follows labor market data closely. She concluded by saying that the 2% inflation target should be achieved gently, “with as little disruption to the labor market as possible.”

These statements and the expected shift in monetary policy support the risk-taking spirit of investors, who in turn gradually raise the risk levels in their investments away from the dollar.

Technically, on the level of gold analysis, the price of the precious metal recorded limited increases, maintaining its weekly gains. Despite this, the price is trading around the 38 Fibonacci levels of the recent downward wave in the price of gold, shown in the chart. While on the other hand, the price of gold maintained its trading above the 50 moving average on the daily time frame, as well as on the four-hour time frame, indicating the dominance of the general upward trend in gold trading. Therefore, if gold continues to rise, it targets the resistance levels concentrated at 2044 and 2060, respectively, which represent the 50 Fibonacci ratio of the aforementioned downward wave. While on the other hand, if the price declines, it will target the 2017 and 2000 levels, respectively. Meanwhile, the momentum indicator witnesses buyers controlling the daily and four-hour time frame, as expectations for the price of gold today include continuing its rise, especially if it exceeds the 38 Fibonacci levels.

2023-12-20 11:40:34
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