Gold prices gained momentum for the third day in a row and climbed to a fresh weekly high on Thursday. A less hawkish Fed gave support to the precious metal amid the recent Covid-19 outbreak in China, according to market analyst Haresh Menghani. However, the analyst states that the Fed’s further tightening expectations revived the USD demand and limited gains. We have prepared Haresh Menghani’s gold price analysis and market comments for our readers.
“A less hawkish Fed has been a tailwind for gold prices”
Gold built on this week’s good recovery from the $1,850 region and back on Thursday scaled up for the third day. The momentum pushed spot prices to a fresh weekly high in the early European session as the bulls struggled to capitalize on the move beyond the $1,900 round figure mark.
Cryptokoin.com on Wednesday, the Fed increased the Fed Funds rate by 50 basis points at the start of the largest rate hike and quantitative tightening (QT) since 2000, but hasn’t yet He dismissed the possibility of a large rate increase.
At the press conference after the meeting, Jerome Powell said that the Fed is not actively considering a 75 basis point rate hike in June. This was seen as an important factor that offered some support to the non-yielding yellow metal. Apart from that, the potential economic repercussions of increasing Covid-19 cases and concerns about strict quarantine practices in China have benefited the safe haven gold.
Stronger appreciation movement in the near term?
However, markets are still pricing in another 200 basis point hike for the remainder of 2022, evident from a fresh rise in US Treasury bond yields. This, in turn, helped stimulate demand for the US dollar and acted as a headwind for the dollar-denominated commodity. This makes it prudent to wait for continued strong buying before confirming that gold has bottomed near the $1,850 zone and is positioned for a stronger appreciation move in the near term.
Market participants are now eagerly awaiting the US economic report, which includes the release of Initial Weekly Jobless Claims in the early North American session. This, along with US bond yields, will affect USD price dynamics and give gold some momentum. Traders will take cues from the broader market risk sensitivity to spot some short-term opportunities.
Additional key levels to watch for gold prices 
