Gold prices fell during the Asian trading period on Tuesday for the second day in a row since the beginning of the week, as hopes for an early cut in interest rates this year have receded, as the focus of the markets this week will be on the decision of the US Federal Reserve meeting on Wednesday, and the Fed is expected to keep the interest rate steady at 5.25% to 5.5% at this meeting.
Investors are currently pricing in one interest rate cut this year and expect it to happen in November.
And if we see this week from Fed Chairman Jerome Powell a rather hawkish speech, coupled with strong jobs data by the end of the week, gold may face a test of some key support levels on the downside, and have further corrective pullbacks.
If the precious metal remains in the range of 2200-2100 dollars, I think we will be in a good position to take advantage of any possible decline in US macro data until the end of the year.
What motivates us to stick to the bullish gold trend in the long term are the geopolitical tensions in the region, especially if they continue and expand the scope of tensions in the region.
The other reason is the US growth data that was released on the declines during last week's trading, where the report showed that growth slowed in the first quarter to an annual rate of 1.6% from the rate of 3.6% in the previous quarter, and with inflation rising in the previous period, there are fears that the economy will slide into stagflation.
The Fed should therefore cut the rate to support growth, but Fed officials will hesitate to act without any indication that inflationary pressures have begun to recede.
So the Fed is at a loss and stuck between a hammer and Anvil.
