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For five trading sessions in a row, the price of gold XAU/USD tries to rebound upwards, but its gains did not exceed the resistance level of $1926 per ounce. It settled around the level of $1920 per ounce at the beginning of trading today, Tuesday. The gains of the upward rebound are still limited as the stronger US dollar is still expected to tighten the policy of the US central bank. In return gold received a positive wound from the growing global geopolitical tensions and fears of an economic recession led by China this time.
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The global MMI index for precious metals did not deviate much from its ongoing sideways trend. In fact, since April, the index has continued to stay within a tight trading range without much movement up or down. Furthermore, precious metal prices, including gold and silver prices, remain relatively high when looking at their price ranges over the past five years. And in general, the index rose by 2.82% between the months of July and August.
A further decrease in prices may occur. However, if any type of deteriorating financial conditions occur in the global economy, precious metal prices will see more bullish sentiment. As noted in MetalMiner Insights, the Federal Reserve’s easing of US interest rate hikes for the first time in over a year has removed some support for the precious metal.
XAU/USD gold prices have recently started to slide further towards short-term support zones. This indicates a possible reversal of the general upward trend that began at the end of last year. Prices will need to show a bullish structure and reflective patterns returning to the uptrend. Until then, analysts expect gold prices to fall further.
Like gold, silver prices have begun to show sliding bullish strength, indicating a possible bearish structure forming within the silver markets. Furthermore, and as with gold, prices will need to find further support, and vice versa on the upside to regain upward momentum.
Stocks rose and bond yields fell at the start of a week full of economic data that will help shape expectations for Federal Reserve policy. In a reasonably quiet trading session, the S&P 500 index hovered near the 4400 level. 3M shares rose after Bloomberg News announced a tentative agreement to pay more than $5.5 billion to settle lawsuits. At the same time, shares of Nvidia Corp led the gains in the giant companies. And two-year and five-year Treasury bond auctions achieved the highest yields since before the financial crisis in 2008.
Overall, risk aversion showed some signs of abating in August, but the US stock index is still poised for its worst month in 2023 as the long-term higher interest rate narrative solidified. Federal Reserve Chairman Jerome Powell stuck to the text in his speech in Jackson Hole on Friday, saying officials are “prepared to raise interest rates further if appropriate,” while stressing that the U.S. central bank will “proceed cautiously” — guided by economic data.
- According to the performance on the daily chart below, the price of gold XAU/USD is still trying to reverse the downward trend.
- This may happen if it moves towards the resistance levels of $1928 and $1945 respectively.
- It may move to those peaks and more easily if the US jobs figures this week came in lower than expected and disappointing the hopes of the path of raising the US interest rate by the Federal Reserve Bank.
- So far the strength of the US dollar from those forecasts is negatively affecting gold’s attempts to recover.
On the other hand, and in the same time period, if the price of gold XAU/USD returns to the support level of $1885, the current upward rebound will be reported.
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