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In the near term and according to the performance on the hourly chart, it seems that the gold price XAU/USD is trading within the formation of a downward channel.
- At the end of last week’s trading, gold futures were stable, with the pressure of the US dollar on the price of the precious metal.
- Investors also combed through the latest economic data, which highlighted both the hesitant consumer and the optimistic consumer.
- Meanwhile, the XAU/USD gold price may test the $1950/oz level after this week’s key monetary policy meeting.
At the end of last week’s trading, the price of gold XAU/USD fell to the support level of $1916 per ounce and closed the week’s trading around the level of $1928 per ounce. Accordingly, the price of the yellow metal recorded a weekly gain of 0.1%, which increases its rise since the beginning of the year 2023 to date to about 5.5%. During the last three months, gold prices rose by more than 17%.
The price of silver, the sister commodity of gold, fell to less than $24 to the level of $23.63 per ounce. The price of the white metal fell nearly 2% this week, adding to its 2023 year-to-date decline of 2.3%. Metal commodities struggled on Friday amid a rising US dollar. As the US dollar index (DXY), which measures the performance of the US currency against a basket of major currencies, rose to 102.00, from opening at 101.84. The index will be flat for the week, but still down 1.5% year-to-date in 2023.
A stronger profit is a bad thing for the goods denominated in the US dollar because it makes it more expensive for foreign investors to buy.
Gold prices managed to stabilize under the low inflation
As the personal consumption expenditures (PCE) price index, the Fed’s preferred measure of inflation, fell to 5% in December, down from 5.5% in November. The core personal consumption expenditure price index, which strips out the volatile energy and food sectors, fell to an annual pace of 4.4%, down from 4.7%.
It may seem counterintuitive, but low inflation is a boon for gold and silver because it will force the US Federal Reserve to hit the pause button on interest rate hikes and possibly lower the federal funds rate. Gold is usually sensitive to interest rate movements because it can affect the opportunity cost of holding the bullion that doesn’t yield a return.
For other metals markets, copper futures fell to $4.218 per pound. Platinum futures fell to $1,018.20 an ounce. Palladium futures fell to $1,604.50 an ounce.
Technical analysis of gold prices XAU/USD:
In the near term and according to the performance on the hourly chart, it seems that the gold price XAU/USD is trading within the formation of a downward channel. This indicates a large short-term upward wound in market sentiment. Therefore, the bears will look to extend the current lows towards $1922 or lower to $1916 per ounce. On the other hand, the bulls will look to pounce on profits at around $1933 or higher at the $1938 resistance.
In the long term and according to the performance on the daily chart, it seems that the price of gold XAU / USD is trading within the formation of a sharply ascending channel. This indicates a strong long-term bullish bias in market sentiment. Therefore, the bulls will look to extend the current high towards $1949 or higher to $1.982 per ounce. On the other hand, bears will target long-term profits at around $1897 or lower at $1864 support.
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