Amid the continued strength of the US dollar, the bearish pressure increased on the price of an ounce of gold, with losses affecting the $1831 support level, which is stable around it at the time of writing the analysis.
- Since the start of this week’s trading, the gold price has been trying hard to breach the $1850 resistance level to avoid a further collapse.
- Amid the continued strength of the US dollar, the bearish pressure increased on the price of an ounce of gold, with losses affecting the $1831 support level, which is stable around it at the time of writing the analysis.
- In general, gold prices took a hit affected by the growing expectations that the Federal Reserve may raise US interest rates further amid rising price inflation. This is a complete reversal of what many had been expecting since November.
All in all, gold prices are retracing a weekly loss of around 1%, reducing their annual gains to less than 1%. In the same performance, silver prices, the sister commodity to gold, were flirting with the level of $22 an ounce. In general, the price of the white metal declined by 0.6% last week, adding to its decline since the beginning of the year 2023 to date by about 10%.
In general, the shifting expectations surrounding interest rates have greatly hampered stocks and metal commodities. And with the anti-inflationary narrative taking a hit and many Fed officials making the case for a rate hike, investors are now starting to hike rates further in the second half of 2023.
Investors will be combing minutes from this month’s Federal Open Market Committee (FOMC) that could provide insight into what rate-setting members think about the current economic landscape. Meanwhile, Minneapolis Fed President Neel Kashkari told CNBC that the US central bank needs to be more aggressive about raising interest rates to bring inflation back to 2%.
And raising interest rates can curb inflation. We need to raise interest rates aggressively to put a cap on inflation, and then watch monetary policy work its way through the economy. “We can always back off,” he told Business News Network on Monday.
The US Dollar Index (DXY), which measures the greenback’s performance against a basket of major currencies, rose to 104.40 Overall, a stronger gain is bad for dollar-denominated commodities as it makes it more expensive for foreign investors to buy. Meanwhile, the US Treasury bond market yield rose across the board, with the benchmark 10-year yield rising 12.6 basis points to 3.954%. The one-month yield fell nearly 1 basis point to less than 4.59%, while the 30-year yield jumped 9.2 basis points to 3.98%.
In other metals markets, copper futures rose to $4,217 a pound. Platinum futures rose to $947.30 an ounce. Palladium futures rose to $1,528.50 an ounce.
No change in my technical view of the performance of the gold price so far, the general trend turned bearish and the continuation of the strength of the US dollar from the content of the minutes of the last meeting of the US Federal Reserve. The growth rate of the US economy and job numbers, as the gold price may be subject to a stronger downward momentum that moves prices towards the $1818 and $1778 support levels, respectively. From the last level, one can think of buying, waiting for the moment of a rebound to the upside.
On the other hand, over the same time period, and as I mentioned before, the bulls will not control the trend again without moving towards the $1885 resistance level again.