Gold attempts to breach $2,000 ahead of US Durable Goods Orders

Since the Fed does not think that additional rate increases are necessary, gold is trying to move its auction beyond $2,000.00. Lower inflation and a cooling of demand would be the results of further tightening of credit conditions by American banks.

As of the writing of this article, the price of the precious metal is $1990.51. The ultimate resistance, $2075.32, which was mapped from the August 2020 high, is where gold is currently moving. In the early Asian session, gold is fluctuating between $1,990 and $2,000 in a constrained range. The precious metal is having trouble moving its auction above the psychological barrier of $2,000 at this time. Nonetheless, the Fed has gotten closer to ending its cycle of tightening policy after eight straight rises in the previous year, favouring the upside.

Fed chair Jerome Powell said that a few increases might be necessary to tighten the policy enough to control the stubborn inflation. Furthermore, it would be pointless to raise rates higher now that there are concerns about a potential banking catastrophe for the US economy.

Higher rates for a longer time period will have a negative impact on persistent US inflation as long as the fight against stick inflation is still ongoing. Also, commercial banks’ continued tightening of loan standards to prevent the growth of non-performing assets (NPAs) would lead to decreased inflation, cooled demand, and a bleak picture for the economy.

The head of the Fed, Jerome Powell, suggested that a few rises might be required in order to tighten the policy enough to curb the persistent inflation. Further, given the worries about a potential banking catastrophe for the US economy, raising rates further higher would be useless.

As long as the battle against stick inflation is still going on, higher rates for a longer length of time will have a negative effect on persistent American inflation. Also, the continuous tightening of credit criteria by commercial banks to stop the escalation of non-performing assets (NPAs) would result in lower inflation, slower demand, and a gloomy outlook for the economy.

Technically, the price of gold has recovered from the demand zone, which was plotted on a weekly basis between $1,947 and 1,960. The precious gold is currently moving towards the greatest barrier indicated by the high of August 2020 at $2,075.32.

In the meantime, the bullish range of 60.00–80.00 has been recaptured by the Relative Strength Index (RSI) (14). Given that the momentum oscillator does not exhibit any signs of divergence or overbought conditions, further gain appears likely.