Gold price extended its gains on Tuesday as investors forecast that the Fed will ease on its aggressive monetary policy in coming meetings. The FOMC meeting minutes set for release on Wednesday will avail further cues on the matter. At the time of writing, the precious metal was at $1,834.49; up by 0.6%.
What’s driving gold price?
Since March 2022, the Federal Reserve has hiked interest rates seven times in a row as it strives to deal with the persistently high inflation. Prior to its December interest rate decision, most analysts predicted that the central bank would begin easing on its aggressive monetary policy.
The forecast was founded on the US CPI data that signalled the peaking of inflation in the US. Besides, with the heightened concerns over a global recession, analysts are of the opinion that the Fed will have to embrace a more dovish stance in the foreseeable future.
On the one hand, gold price found support in the Fed’s decision to increase rates at a slower pace of 50 basis points. In fact, since the announcement of the bank’s interest rate decision on 14th December, the precious metal has risen by close to 3% as the value of the US dollar declined.
Even so, gold price remains subject to curbed gains as investors await further details from the FOMC meeting minutes set for release on Wednesday. This follows Jerome Powell’s speech in mid-December that did not necessarily match the central bank’s interest rate decision.
Granted, the Fed Chair’s hawkish tone did not have a major impact on gold price and the broader financial markets. However, the upcoming FOMC meeting minutes are expected to shape the precious metal’s price path in the ensuing sessions. Besides, recession concerns remain an influential factor for the commodity.
Gold price prediction
As shown on its daily chart, gold price remained above the 25 and 50-day EMAs ahead of the Fed’s meeting minutes. While this is a bullish sign, the precious metal will likely record subtle movements as investors await further cues from the minutes set for release on Wednesday.
As such, I expect 1,820.64 to remain a steady support level for the commodity. Hints that the Fed intends to continue with its aggressive monetary policy may have the bulls defending the crucial support at 1,795.66. On the flip side, a dovish stance will further boost gold price will 1,870 being the next target.