Gold Analysis: XAU/USD Surges to Fresh Record Above $2250 – Where Next?

Gold Key Points

Gold is seeing a notable rally to record highs despite otherwise quiet trading conditions.
Expectations of a Fed rate cut this quarter are supporting the bullion.
XAU/USD’s technical outlook remains bullish above previous-resistance-turned-support near $2200.

With most of Europe still out of the office for the long Easter holiday, markets are playing an April Fool’s Day trick on any traders expecting volatility today.

Source: FinViz

That said, there is one notable move on the screens at the US open: Gold is in rally mode, hitting a fresh all-time record high above $2250 in the wake of as-expected Core PCE data on Friday. In an interview following the release, Federal Reserve Chairman Jerome Powell characterized the inflation data as “along the lines of what [the Fed] would like to see” in order to start cutting interest rates, stoking traders’ expectations that the Fed’s easing cycle will start later this quarter.

As a reminder, gold prices tend to move inversely with interest rates. When interest rates fall, gold becomes relatively more attractive compared with fixed income assets such as bonds, which offer weaker returns in a lower interest rate environment. Or put differently, lower interest rates reduce the opportunity cost of holding gold.

Looking ahead, markets will be keying in on Friday’s highly-anticipated Non-Farm Payrolls (NFP) report to see if it confirms a soft landing in the US jobs market. Traders and economists are expecting the report to show about 205K net new jobs were created in March after an initial estimate of 275K in February.

Gold Technical Analysis – XAU/USD Daily Chart

Source: TradingView, StoneX

Turning our attention to the chart, Gold has clearly broken out of March’s 3-week sideways range between $2150 and $2200, hinting at the potential for another leg higher from here. For now, the near-term bullish momentum will remain the dominant feature of the chart as long as prices hold above previous-resistance-turned-support at $2200, and with prices already at record highs, there’s little in the way of meaningful resistance until above $2300.

-- Written by Matt Weller, Global Head of Research

Follow Matt on Twitter: @MWellerFX

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.