Gold awaits for Fed dot plot and a distribution phase | Errante
Market Overview
Gold has reached a new all-time high, fueled by a soft U.S. Producer Price Index (PPI) report, marking bullish sentiment in the market. The precious metal has been on a steady upward trajectory, largely due to favorable economic conditions and growing anticipation surrounding the Federal Reserve’s monetary policy stance. On the technical charts, gold continues to climb, reflecting solid support levels and robust demand, with buyers targeting new highs.
In recent sessions, gold prices have gained momentum thanks to weaker economic data in the U.S., which may deter immediate interest rate hikes. Short-term price action shows both opportunity and caution, as traders closely monitor critical resistance and support zones—particularly around the $2,955 level. Gold’s bullish drive may persist unless the Federal Reserve signals a significant change in its policy outlook during upcoming meetings.
Several key elements are shaping gold’s current rally. First, soft U.S. inflation data, including CPI and PPI figures, have reinforced expectations that the Federal Reserve will maintain its current interest rate. Lower or steady interest rates are typically favorable for gold, as they cause real yields to drop, increasing the appeal of non-interest-bearing assets like gold.
Fundamental Factors
Another factor is market anticipation surrounding Wednesday’s Federal Open Market Committee (FOMC) decision. The central bank is expected to maintain the status quo on rates. However, attention will zero in on the Fed’s “Dot Plot,” which outlines future rate forecasts. Revisions suggesting additional rate cuts in 2025 could further bolster gold prices.
Technical Analysis
March 13th – Bullish Run and Key Candle Formation: On March 13th, the market experienced a bullish run, leading to the formation of a significant candle. This candle could potentially serve as a “mother bar” or an accumulation bar, indicating a probable base for future price actions.
March 14th – Candle Sweep and High Resistance: On March 14th, there was a “sweep” of the March 13th candle, meaning the market attempted to move beyond its range but eventually failed. Subsequently, the high established on March 14th became a strong resistance as the market failed to breach it.
March 17th – Emergence of “No Demand” Candle: A “no demand” candle was observed on March 17th, signifying weakening buying pressure and a lack of interest from buyers to push the price higher.
Head-and-Shoulders Pattern Formation: The overall chart resembles a potential head-and-shoulders formation, with the above-mentioned levels and candles playing critical roles in defining the shoulders and head of the pattern.
Confirmation of Bearish Momentum – Break Below 2978.50: A break and close below the key level of 2978.50 is essential to confirm bearish momentum. This breakdown could lead to the next target being the fair value gap, often aligned with internal liquidity, as the broader market focus may shift downward.
Continuation of Bullish Trajectory – Break Above All-Time Highs: To reignite and sustain the bullish trajectory, the market would need to break above the all-time highs. This move would need significant support, such as pronounced weakness in the US dollar, to maintain robust upward momentum in gold prices.
Conclusion
Gold’s rally reflects broader market sentiment driven by economic data and Federal Reserve policy expectations. With Wednesday’s FOMC decision and upcoming U.S. Retail Sales reports, the market is poised for notable volatility.
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