Gold price forecast ahead of the FOMC meeting minutes

Gold price has held steady even as the US dollar and Treasury yields strengthen. The Russia-Ukraine crisis continues to boost the metal’s safe-haven appeal. Besides, investors are keen on the FOMC meeting minutes amid talks of a probable recession.

FOMC meeting minutes

For the remainder of the week, gold price will be reacting to the FOMC meeting minutes scheduled for release on Wednesday. Data released in the past week indicated a strong labor market. US unemployment rate dropped to a fresh two-year low of 3.6%. Besides, 431,000 payrolls were added in March. The strong job numbers recorded in recent months are one of the aspects that led to Fed’s shift to a more hawkish tone.

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During its March meeting, it hiked interest rates for the first time since 2018. investors expect a more aggressive hike of 50 basis points in its May meeting as it strives to ease the inflationary pressures.

On the one hand, an environment of higher interest rates tends to strengthen the greenback while weighing on gold price. Higher Treasury yields would also  increase the opportunity cost of holding the non-yielding bullion.  

Nonetheless, there are heightened concerns over a recession amid expectations of aggressive rate hikes in the course of the year. The situation will likely continue to offer support to the precious metal. In addition to its conventional status as a hedge against inflation, its safe-haven appeal will further boost its value. The West may impose further sanctions on Russia as the war crimes in Ukraine become more apparent.

Gold price technical outlook

Gold price has edged higher after being range-bound since late last week. After hitting the crucial resistance level of 1,950.50 on the last day of March, it has been trading between 1,941.84 and 1,915.86. At the time of writing, it was hovering around the range’s upper border at 1,940.64. On a daily chart, it is hovering around the 25-day EMA while remaining above the 50-day EMA.

In the short term, I expect gold price to remain within the aforementioned horizontal channel as investors await further cues from the FOMC meeting minutes. The Fed’s aggressive tone may weigh on the precious metal; leaving the bulls to defend the crucial support zone of 1,900.

Further decline may have it find support at the resistance-turn-support level of 1,871.60. Even so, it will likely bounce back to the psychological level of 1,900 amid heightened inflationary pressures and growing concerns over a recession. Besides, the ongoing Russia-Ukraine war continues to boost its safe-haven appeal. On the upside, 1,950.50 will remain a key resistance level to watch.