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Fed’s Dovish Signals Propel Gold to 10-Day Highs

By Camilo Botia

Gold prices surged to a 10-day high on Thursday, fuelled by hints from the Federal Reserve (Fed) of a dovish pivot and potential rate cuts next year. This move sent waves across the commodities market, with metals posing the biggest gains.

The catalyst for the rally was the Fed’s post-FOMC meeting statement, which signalled a potential end to its aggressive monetary tightening cycle. While interest rates remained unchanged for the third consecutive meeting, most Fed officials (17 out of 19) projected lower rates by the end of 2024. This dovish tilt sent shockwaves through the market, with investors racing to adjust their positions. Some analysts consider this extremely positive for gold prices as lower interest rates reduce the opportunity cost of holding non-yielding gold and weaken the dollar, making it a more attractive investment.

The impact was immediate, with gold prices rising around $2,050 and more than 3% since Tuesday’s lows. Meanwhile, the dollar tumbled to a four-month low, further fuelling the gold rally. The Fed’s dovish pivot marks a significant shift in the market landscape, and its implications are far-reaching. Not only does it bode well for gold and other precious metals, but it also provides a much-needed boost to the broader commodities market.

With investors now looking for alternative investments in a lower-interest-rate environment, commodities could be poised for further gains in the months ahead. If gold prices rise, they will face two resistances at $2,079.39 and $2,144.61, monthly technical levels we have been monitoring since early this week.

However, if the price trades lower, it will encounter the weekly psychological barrier of $2,000 and the support of $1,983.30, a monthly technical level for gold. So far, with the RSI indicator, there is no signal the market is close to an overbought condition, so the price still has room to edge higher.

Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.

Taurex is the trading name of Zenfinex Global Limited, Stochastic Africa SL Ltd, Zenfinex Global LLC, and Zenfinex Limited.

Zenfinex Global Limited is registered in the Republic of Seychelles with registration number: 8428731-1 and is regulated by the Financial Services Authority of Seychelles (license number SD092). Its registered office address is F20, 1st Floor, Eden Plaza, Eden Island, Seychelles.

Stochastic Africa (SL) Limited is a company registered in Sierra Leone with Company Number: SL270319STOCH05271 and is licensed by the Bank of Sierra Leone under license number BSL/SAL/2023 and with the registered office at 148D Wilkinson Road, Freetown, Sierra Leone.

Zenfinex Global LLC is a company registered with the Financial Services Authority in Saint Vincent and the Grenadines under registered number 138 LLC 2019. Its registered office is Hinds Building, Kingstown, Saint Vincent, and the Grenadines.

Zenfinex Limited is a company registered in England and Wales under registered number: 11077380. Authorised and regulated by the Financial Conduct Authority under firm reference number 816055. Its registered office is 4th Floor, 4 Eastcheap, London, EC3M 1AE, United Kingdom.

*All trading involves risk.

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