Category: Forex News

Support at $2,147 to Welcome Dip Buyers? LeapRate

By Published On: March 11, 20242.9 min readViews: 2280 Comments on Support at $2,147 to Welcome Dip Buyers? LeapRate

Last week, we witnessed the price of spot gold (XAU/USD) refresh all-time highs (ATHs), comfortably north of the $2,000 mark at $2,195.

Markets witnessed demand for the precious metal increase based on several factors, which has seen buyers lift prices higher for eight consecutive days.  Last week, the largest one-week gain was recorded since early October 2023.

Gold Demand

Factors underpinning gold include rate expectations forecasting that the US Federal Reserve (the Fed) will step up and begin loosening policy. As of writing, the OIS curve has priced in the first 25 bp cut in June, with approximately 100 bps of cuts for the year (four rate cuts). You may remember from the Fed’s latest dot plot that the Fed projected three rate cuts this year.

The anticipation of lower rates in the US, coupled with lower (real) yields and US dollar (USD) trading on the back foot (MTD, the buck is lower by -1.3% according to the US Dollar Index), along with speculative trend trading, has contributed to the precious metal’s appeal.

Support at ,147 to Welcome Dip Buyers? LeapRate

 

Trend-Follower’s Market

Much like the price of BTC/USD and the S&P 500 right now, following XAU/USD’s ATH last week, trend-following strategies will seek a correction and possible dip-buying opportunity in anticipation of further record highs.

Keeping things simple, the Relative Strength Index (RSI) on both the weekly and daily charts exhibit overbought conditions (the daily chart is approaching indicator resistance as far north as 87.21, a level not showing itself since August 2020), which highlights a potentially overheated market. This, in addition to the clear uptrend we are in now, could prompt a correction in this market to retest the previous ATH at $2,147.


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Should a correction to $2,147 emerge, how one pulls the trigger will be trader-dependent. Some will seek additional confirmation. This might be in the form of a news event that should bolster gold; we have US CPI tomorrow, for example, and should we see a notable miss, this is likely to trigger a dovish repricing and weigh on the dollar and, by extension, further strengthen gold. Alongside this, a technical trigger will likely be employed (it could be anything from a basic bullish candlestick configuration to a more advanced assessment of the approach to the level [think AB=CD patterns]).

 

 

DISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation, or particular needs. FP Markets has made every effort to ensure the accuracy of the information as of the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products, including applicable fees and charges, are outlined in the Product Disclosure Statements available from the FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

 

 

 


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