Gold came on a bullish track amid fresh banking jitters- What next?

Gold prices witnessed a speculative jump yesterday. Prices rebounded more than 1000 points from the day’s low.  Witnessed its biggest single day gains in a month. Prices railed abruptly as yields dropped on renewed fears of contagion in the U.S. banking sector, ahead of the Federal Reserve’s widely anticipated decision to hike interest rates.

Further, the dollar weakened against its major peers after US economic data showed some weakness and   a drop in Wall Street stocks on worries about a U.S. debt default also weighed on upside momentum.

Data showed that U.S. job openings fell in March and   factory orders came in below economists’ expectations, a day before the Federal Reserve is expected to hike rates by an additional 25 basis points.

The U.S. Labor Department said that U.S. job openings fell to 9.59 million in March. The U.S. The Commerce Department also said that factory orders rose by 0.9% in March, below expectations for a 1.1% gain.

The data comes as investors try to gauge whether the Fed is likely to pause rate hikes when it concludes a two-day meeting on Wednesday, or if further increases are possible if inflation remains high.

Wall Street’s main indexes fell after Treasury Secretary Janet Yellen said the U.S. government could run out of money within a month, while investors awaited the Federal Reserve’s policy decision.

Today, precious metals will react strongly on FOMC Statement and Federal Funds Rate decision.  Market Forecast is to hike 5.25% from 5.00%.  This might have a negative impact on the bullions. However, any hint about a pause of rate hike and economic outlook could extend the recent rally in precious metals.

Technical Outlook

On the above chart, Since 27 April 2023, Gold prices rebounded from the low 59547 and made a high of 60771 yesterday. Prices gained more than 1.10% yesterday and settled at 60628.00.

Recent price action resulted in formation of rising three candlestick patterns. Which is indicating a bullish momentum in the near future.

However, Gold prices would need to break its immediate resistance at 60690, coinciding with two week consolidation resistance.  In order to test 61000-61350-61750.

Alternatively, on the downside, crucial support is seen at 59700 below it prices may retreat towards 59580-59300 again.

Hence, either wait for a break of 60690 for fresh long or buy on dips around 60150-60000  should be followed with stop loss  below 59720..

Alternatively, a break below 59700 will change the sentiment and prices may drop towards 59580-59300 again.