Gold weekly analysis: FED will hike rate next week.(14-18 March)

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The gold price fell from an all-time high to about 1,100 pips last week. Though last week's start was good, the gold dropped nearly 1100 pips in the last three days of the last week.

This is why gold prices had dropped.

First, there was some news at the meeting between Ukraine and Russia. As long as both sides agreed to make some concessions, they could work things out even though the meeting didn't work out.

2. The 10-year yield on U.S. Government Bonds has gone up from 1.6% to 2%. If the price of bonds goes up, the price of gold will go down. Bonds and gold are both safe-havens. Bonds pay interest, but gold doesn't. So, the gold price drops if the bonds' interest rate goes up. When bond rates went up, gold prices fell.

3. Many Fed members said positive things last week; I mean, they delivered the hawkish statement. The price of bonds went up a lot because of the hoax. And the dollar stays strong because the Fed is still in a "hawkish" mode. Because gold always moves against the dollar, it makes sense that gold will be weak if the dollar is strong.

As I said in my last weekly forecast, it must happen after the Gold All-Time High Prize has been hit. And so it was. Gold has come back down almost 1100 pips after hitting a record high rate of $2070.

These are the things that happened to gold last week. Now, what could happen to gold next week?

Wednesday, the 16th, is the date of the FOMC meeting. It's almost certain that the Fed will raise the 25 bp rate. However, there was talk that the Fed might raise the rate by 50 bp in March.

In this case, raising the rate by just 25 bp doesn't mean that gold prices will go down. In other words, if the 50 bp rate rises, the bond rate will also rise. If the bond rate rises, the gold price will fall.

Russia and Ukraine are in a war right now, which means that the demand for gold is high. It could also fall if Jerome Powell raises the rate by 50 bp and makes an aggressive statement on the 16th of March.

This could make gold fall to 1950/1900 dollars per ounce, which would be very bad for the gold market for a short time. Even so, there's no point in wearing more than that because gold prices won't go down in the long run until the Russia-Ukraine war is over.

The study of technical things

Gold H1 Chart

Until the gold is above $1950, it will keep going up. In gold, $1950 is where the trend line support is identified. There is a solid barrier to the $2020 price from the present rates. If the Gold Prize closes above the $2020 area, gold will return to the all-time high of $2075.

On the other hand, if the gold closes below $1950, the uptrend will be broken for a short time, and the gold will fall apart.

There are three places I want to go if gold closes below $1950. My first target is $1930, my second target is $1885, and my last target is $1830.

I think gold is not yet on a downtrend. As long as gold is above the trendline support level of $1950, it will keep going up.

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We have updated our gold analysis ahead of FOMC and Retail Sales. Check it out here..