The March Federal Reserve meeting maintained interest rates unchanged and further indicated three rate cuts in 2024, but hinted that future rate adjustments depend on macroeconomic data. After hitting a historical high of $2,220 per ounce, gold prices experienced a significant pullback. 

Since the March rate meeting indicated potential rate cuts later this year, gold investors have been eagerly anticipating the Fed's implementation of rate cuts starting in June. This explains why, despite pressure from profit-taking, spot gold has remained in a high-price range. However, future rate adjustments are contingent on macroeconomic data.

According to traders' predictions, there is currently a 70% chance that the Fed will begin cutting rates in June. However, the key now is to observe whether US economic data can change the market's expectation of three rate cuts by the Fed this year. So far, US economic data has remained quite strong. 

The upcoming April 5 US non-farm payrolls data may break the recent stalemate in gold prices. If the data is strong, it will likely reduce market expectations for the frequency and magnitude of Fed rate cuts, thereby exerting downward pressure on gold. If the data shows a declining trend, it may continue to stimulate the gold bull market and drive gold prices higher. Ahead of the data release, gold is expected to continue cautious consolidation to observe the potential direction of Fed rate cuts. 

From a technical chart perspective, current spot gold prices are oscillating in a sideways trend, and investors need to tread cautiously amid market signals. Prices hovering around the key level of $2,165.81 indicate a balance between bullish momentum and potential corrections. Resistance is at $2,222, while support is at $2,149.29, clearly indicating further breakthroughs in the range. A downside breakthrough of this key support level may signal a trend reversal, triggering a deeper pullback, with a target opportunity to $2,087. Comprehensive investment decisions should be made considering both fundamental factors and market sentiment at that time.

Hugo Leong

Gold Analyst of Hantec Group