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Central Banks and Fed Policy Support Gold’s Gains
Beyond technical strength, fundamental factors continue to support gold’s rally. Central banks, particularly China, have been aggressively accumulating gold reserves for four consecutive months, signaling a strategic shift away from the U.S. dollar. “Central banks continue record-level gold acquisitions, seeking to diversify away from an increasingly volatile U.S. dollar,” said GoldCore CEO David Russell.
Meanwhile, expectations of Federal Reserve policy easing have added to gold’s appeal. While the Fed is expected to keep rates unchanged at its upcoming meeting, traders are pricing in rate cuts later this year. A dovish stance would further weaken the dollar and support gold’s upward momentum.
Treasury Yields Rise on Inflation Concerns
Despite gold’s strength, U.S. Treasury yields climbed on Friday as investors digested fresh inflation data. The benchmark 10-year yield rose 3 basis points to 4.306%, while the 2-year yield jumped 6 basis points to 4.013%. A University of Michigan report showed consumer sentiment fell sharply in March, with inflation expectations rising to 4.9% from 4.3%.
Andrew Brenner of NatAlliance called the data “stagflationary,” suggesting that persistent inflation could complicate the Fed’s rate decision. If inflation remains elevated, gold may continue to benefit from hedging demand.
Gold Prices Forecast: Bullish Momentum Intact, But Watch for Pullbacks
Gold’s breakout above $3,000 is a major technical and psychological milestone. While the trend remains bullish, traders should watch for potential profit-taking. If gold holds above the 50-day SMA at $2,830, the rally could extend toward new highs. However, any resolution in trade tensions or a recovery in equities could slow momentum.
For now, safe-haven demand, central bank buying, and Fed policy expectations continue to support gold’s bullish outlook. Traders will closely monitor the Fed meeting next week for further direction.
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