GOLD (XAU/USD) PRICE FORECAST:

Gold prices attempted a recovery today and reached a high of around $1997/oz before sellers took control in the aftermath of the US CPI release. The CPI print appeared positive at first glance but the uptick in the monthly inflation figures mean the Fed are unlikely to commit to any rate cuts at tomorrow’s meeting. This saw the DXY rise temporarily and push Gold prices back to a key support area.

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FOMC MEETING AND SAFE HAVEN APPEAL

As geopolitical tensions remain on a knife edge Gold is likely to remain supported and attract buyers on significant dips. The appeal of the precious metal remains high and with the inevitability of rate cuts at some point in 2024 Gold will likely remain above the $1800/oz mark for the foreseeable future.

Heading into the FOMC meeting tomorrow and all eyes will be fixed on the Economic Projections and how they might differ from the current market expectations. Comments by Fed Chair Powell will also hold a significant amount of sway tomorrow and I do expect some form of push back by the Fed Chair regardless of what the Economic Projections reveal.

The immediate direction for Gold prices will rest on the reaction of the US Dollar and US Yields to the meeting tomorrow. Any significant deviations between market participants and the Fed could be the catalyst needed for Golds next move. Push back from the Fed and significant repricing regarding cuts in 2024 could give the US Dollar legs and push Gold closer the $1950/oz support area. If the Fed do adopt a more dovish approach and hint at rate cuts in 2024 in line with current market expectations, then we could see Gold bulls rejuvenated and push back above the $2000/oz. All in all, the US Dollar still holds the key as markets wait with bated breath.