ICYMI – 30 April 2024 – Monday marked a modest retreat in gold prices, with the commodity trading lower as market participants hold their breath for major upcoming economic indicators.
The trading community is treading lightly, preferring to wait on the sidelines until the Federal Reserve makes its announcement and the latest U.S. job data is released later this week.
What to Expect from Gold Prices
As traders speculate on the direction of monetary policy, we’re bracing for a spike in gold price volatility. The announcement from the Federal Reserve, expected Wednesday, could significantly influence market dynamics. Currently, the critical support level for gold stands at $2,320.
Should prices dip below this threshold, we may see them slide towards $2,295, and potentially even down to $2,260, which marks the 38.2% Fibonacci retracement level of this year’s gains.
On the flip side, if the market sentiments turn bullish and gold prices rally, initial resistance could surface near $2,355, with a more substantial barrier at $2,395. Surpassing these levels might set the stage for gold to challenge the $2,420 mark, revisiting the highs observed last week.
Despite a surprisingly strong earnings season, the stock market faces headwinds. The rising Treasury yields, a recurring theme from 2023, continue to dampen investor enthusiasm.
With the 10-year Treasury yield currently sitting at 4.63%—a sharp rise from earlier in the month—the S&P 500 has witnessed a decline of approximately 3%.
The 2-year Treasury yield has nearly touched the 5% mark, a pivotal point historically linked to downturns in stock market performance. Currently, it is at 4.98%, underscoring the nervous sentiment pervading the equity markets.
A significant shift in market expectations around the Federal Reserve’s monetary policy has occurred, moving from an anticipated seven rate cuts in 2024 down to just one, driven by persistent high inflation figures.
Reflecting on past events, the impact of rising yields in 2023 led to considerable sell-offs, similar to patterns seen during previous cycles such as in early 2018.
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