Gold price pulled back on Monday’s trade after rallying past $2,000 an ounce on Friday. For about three weeks now, the asset has been on an uptrend. With the ongoing geopolitical tensions in the Middle East, the demand for precious metals and safe havens in general has been on the rise.
In the new week, investors will eyeing the Federal Open Market Committee (FOMC) meeting , which is set to end on Wednesday. The central bank is expected to leave interest rates unchanged at between 5.25 -5.5%. Even so, there are uncertainties on whether it will tighten its monetary policy further in subsequent meetings.
In a recent event held by the Economic Club of New York, the Fed Chair, Jerome Powell stated, “A range of uncertainties, both old and new, complicate our task of balancing the risk of tightening monetary policy too much against the risk of tightening too little”.
An environment of high interest rates tend to bearish for gold price. Ahead of the aforementioned economic event, the US Treasury yields were up to 4.88%. In the last week, the yields rallied past 5%. A rise in Treasury yields is usually inverse to the non-yielding bullion. As such, investors will be keen on the Fed’s guidance and gold price’s reaction.
September’s job report is also slated for release on Friday. Last week’s US initial jobless claims suggested that the country’s labor market may have eased slightly. A strong US labor market has been one of the aspects that the Fed has considered in its monetary policy decision.
Gold price prediction
Gold price surpassed the psychologically crucial zone of 2,000 in Friday’s session. This was the first time for the precious metal to exceed the aforementioned level since mid-May. Granted, after hitting a multi-month high at 2,009 in the previous session, it has pulled back to 1,995.57 as 12:01 pm GMT.
Even the pullback, gold price remains above the 25 and 50-day exponential moving averages as shown on its 2-hour chart. This is an indication that the bulls are still in control.
In the short term, the precious metal will likely find resistance around 2,005 as the bulls look to gain enough momentum to rally further. At the lower level, they are keen on protecting the support at 1,990.16. Past that level, the 50-day EMA at 1,984.76 and lower zone of 1,979.37 will be support levels worth watching.
