For the second day in a row, XAU/USD gold price is trying to rebound to the upside to compensate for its recent sharp losses, which pushed it towards the $1932 support, its lowest in more than two months. The rebound gains to the upside extended today at the $1965 resistance level, before settling around $1958 an ounce, at the time of writing. The recent gains of the US dollar contributed to a positive reaction to the gold market.
Gold prices have rebounded from their recent losses, as the US dollar and Treasury yields fell amid broader market optimism about the US debt ceiling deal. Meanwhile, the US dollar retreated from its highest levels in 10 weeks, making bullion cheaper for holders of other currencies. The benchmark 10-year Treasury yields also hit a one-week low.
Along with these positive elements, Jim Wyckoff, senior analyst at Kitco Metals, told Reuters: “You could also see some fund managers wining over their positions at the end of the month, taking profits on their short positions and buying back.” He added, “In the near term, gold prices will go down until we see a new catalyst.”
Investors were also assessing the surprisingly strong US economic data on Friday that reinforced the case for further monetary tightening to curb inflation. Before the data was released, the price of bullion had fallen to a two-month low. Ole Hansen, commodities analyst at Saxo Bank, noted that while previous concerns about the US debt deal had supported prices, the repricing of the Fed’s rate hike path was keeping gold under pressure.
Investors now see the Fed as more likely to raise US interest rates next month rather than leave them unchanged, as the debt deal is seen as mitigating some economic risks that could have kept the central bank on the sidelines.
- The bulls are trying to control the direction of the XAU/USD gold price.
- It may happen to you if prices return towards the $1985 and $2000 resistance levels, respectively.
- According to the performance on the daily chart below, the bears will have the power to control for a period of time in the event that the price of gold moves below the psychological support level of $1900 an ounce.
- The fate of gold will be determined by the performance of the US dollar in response to the announcement of US job numbers and the future of the final vote on the US debt ceiling.
Renewed geopolitical concerns and the future of global central bank tightening will have a reaction on the performance of the gold price. Even with the recent decline, gold prices have increased significantly over the past six months, and for the third time since 2020, the price of gold rose above $2,000 an ounce, and then fell back from it.
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