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MTrading Team • 2023-03-01

Gold Price Is to Test the Floor Shortly

Gold Price Is to Test the Floor Shortly

The gold market dropped by 6% in February. Experts say the metal price is about to test its floor taking into account the downward momentum driven by a higher and longer rate hike outlook. It all resulted in investors’ fears of sticky inflation.

Gold price is currently in the oversold zone. What’s more, it continues to trend low. Some of the pillars that drove the asset price rally at the beginning of the year are weakening in addition to appearing macro headwinds.

On the one hand, the weakening USD and the shift in tactical interest have become supportive of the yellow metal. On the other hand, the US Dollar weakness appeared to be premature despite rising rate hike expectations. These factors made the gold price scale back.

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Key Gold Factors

The two main factors that will help the asset halt its selloff are continued interest and robust physical demand for gold. Experts are sure the instrument will test the floor shortly considering another two crucial pillars. The first one involves demand from China and the official sector.

Gold fell from trading above $1,940 per ounce and is forecast to go above $2,000 to realistic April futures at $1,825 per ounce seen the previous day.

Although central banks continue buying gold, China’s official sector demand can slow down causing a chain reaction. Meanwhile, official-sector gold purchasing was essential to support the asset price. India’s physical demand is weakening as well.

May the trading luck be with you!