Key Takeaways

  • Gold traded as high as $2,009/oz last week before settling back under the $2,000 level
  • The market gears up for Federal Reserve interest rate decision due Wednesday

Gold’s Gains

Gold has rallied 1.3% in the last week, currently trading at $1997/oz. The yellow metal has seen a remarkable 7.12% surge in the last month, brushing on a fresh five-month peak last Friday at $2,009 per troy ounce. The safe-haven metal is being sought after as the Israel-Hamas war rages on and investors gear up for the Federal Reserve’s policy meeting this week. 

The gold rush kicked off with Hamas’ attack on Israel on October 7th, sending investors flocking to known safe-haven assets. As the situation continues to develop, traders are on the lookout for safer options to protect their portfolios.

Besides the ongoing clashes fueling the precious metal’s upside swing, the Federal Reserve’s interest rate stance,  to be revealed on Wednesday, pushes gold even further. The FOMC meeting, due to begin today, may have an effect on market sentiment as investors brace for any surprises.

Fed Chair Jay Powell is due to speak on Wednesday morning. The speech will be the first since his appearance at the Economic Club of New York (ECNY), where he left the door open just a crack for further rate hikes by the end of the year. 

The market is placing their bets on the Fed standing firm on its interest rate pause. At this time, less than 2% of polled participants believe the interest rate will be lowered, while the remaining 98.7% believe it will stay the same

A Broader Perspective

Looking at the bigger picture of the markets, the Dow Jones Industrial Average gained 1.57% in Monday’s session as fears of a “death cross” grow. A death cross happens when the 50-day moving average falls below the 200-day moving average. The megacap S&P 500 index trailed closely behind with a 1.2% boost, snapping a 3-day losing streak, reinforced by exceptional McDonald’s earnings. The tech-heavy Nasdaq closed with a 1.15% gain.

There’s more to come, with tech giant Apple set to release earnings for the fiscal year ending September 2023 after market close on Thursday. 

To sum it up, traders should closely monitor gold’s price. Another move past the $2,000/oz mark could result in a reversal as the bullion chugs toward resistance levels. Jay Powell’s speech will provide some more insight into the current economic situation in the US, which in turn may have a ripple effect on the markets. It could be a good idea to consider diversifying your portfolio and reassess your winning strategy.