- Gold trades at $3,000 at the start of this week after posting a fresh all-time high on Friday.
- Traders brace for an eventful week with geopolitics and the Federal Reserve decision.
- Gold could hit $3,020 in the near term, with UBS joining BNP in its projections for $3,200.
Gold’s price (XAU/USD) trades right at $3,000 at the time of writing on Monday following Friday’s take-profit-led correction after hitting a fresh all-time high of $3,005. Traders are bracing for a rather eventful week with the German Bundestag set to vote on the defense spending plan, which would boost the European industry by €1 trillion, on Tuesday. On that same day, United States (US) President Donald Trump is scheduled to meet Russian President Vladimir Putin on a possible peace deal for Ukraine.
As if that is not enough, the US Federal Reserve (Fed) and its Federal Open Market Committee (FOMC) convene on Tuesday and Wednesday before issuing its latest monetary policy decision. Traders will be eager to see how every FOMC member will vote and pencil in forward guidance on the Dot Plot (Philips) curve. Expectations are for no change in the monetary policy, while expectations for a rate cut in May or June constantly increase and decrease day over day.
Daily digest market movers: Pivotal week
- President Trump said he will speak with Russian President Vladimir Putin on Tuesday as the US presses for an end to fighting in Ukraine and European nations rush to bolster their support for Kyiv, Bloomberg reports. Trump confirmed that the discussion will be about territory and dividing up certain assets, and there is “a very good chance” for a deal.
- UBS Group AG became the latest bank to raise its price outlook for Gold on increasing chances of a protracted global trade war, a scenario analysts expect will continue to drive investors to scoop up more of the precious metal haven asset. UBS sees the same level as BNP, with Gold trading at $3,200 in the second quarter.
- The CME Fedwatch Tool sees a 99.0% chance for no interest rate changes in the upcoming Fed meeting on Wednesday. The chances of a rate cut at the May 7 meeting currently stand at 27.5%.
Technical Analysis: $3,000 starting point
The $3,000 mark is now the main beacon going forward and needs to hold ground at one point. Seeing the steep surge to a fresh all-time high last week, it is still quite good for the precious metal to fall below the level briefly and allow traders to reenter at a lower price. Once the $3,000 level starts to hold and does not allow any excursion below it, traders can gear up for $3,100 and $3,200 in a couple of weeks or months.
The new all-time high at $3,004 reached on Friday is the first level to beat once $3,000 is reclaimed again. That mentioned psychologically important $3,000 level faces a double challenge on Monday, with the R1 resistance coming in at $2,999 to reinforce this area. Intraday traders might use this zone to scalp some profit, as the R2 resistance at $3,015 looks a bit too far for the day.
On the downside, the daily Pivot Point at $2,989 has provided ample support to avoid slippage to the downside earlier in the day. In case Gold reverses below that level, look for the S1 support at $2,973 and the S2 support at $2,962 on the downside.
XAU/USD: Daily Chart
Read the full article here