Stable with a Downward Trend

With a temporary halt to the gains of the American dollar, the price of gold XAU/USD tried to rebound upwards, but its gains did not exceed the level of $1930 per ounce. It returned to downward stability around the level of $1920 per ounce as the bulls are still looking for strong factors to take gold out of a recently formed downward channel. The yellow metal recorded tepid gains due to the weakness of the US dollar, but it was topped off by rising Treasury bond yields. All eyes will be on the US inflation report this week, and a higher than expected reading may affect the financial markets.

Gold is trying to recover from a weekly loss of about 1% but is still up 6.5% year-to-date. In the same performance, the prices of silver, which is the sister commodity of gold, rose above the level of 23 dollars and in general the price of the white metal decreased by 5% last week and decreased by more than 3% during the year.

The price of the yellow metal rose amid the weakness of the US dollar due to the statements of Bank of Japan Governor Kazuo Ueda. Speaking in an interview with a local newspaper, Ueda indicated that Tokyo may abandon the negative interest rate policy that has lasted for decades. This supported the yen and hurt the dollar. According to trading, the US dollar index (DXY), which measures the performance of the US currency against a basket of other major currencies, fell to 104.43, from opening at 105.09. The index has risen by 0.9% since the beginning of the year. But the weaker dollar is good for dollar-denominated goods because it makes buying them cheaper for foreign investors.

Treasury bond yields have risen mostly as investors gradually change their approach on interest rates, with many worried that the Federal Reserve may pull the trigger to raise US interest rates again this year. Accordingly, the yield on ten-year bonds rose by 3.4 basis points to 4.29%. And the yield on the two-year bond rose 1.1 basis points to 4.995%, while the yield on the 30-year bond jumped 4.5 basis points to 4.377%.

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.

This week the US Consumer Price Index (CPI) will be released, and the growth rate is expected to rise for the second month in a row. The consensus estimate of 3.6% and core inflation, which excludes the volatile food and energy components, is expected to fall to 4.3%.

For the other metal markets, copper futures rose to $3.805 per pound. And platinum futures rose to $902.20 per ounce. Palladium futures rose to $1,210.50 an ounce.

• The general upward trend for the price of gold XAU/USD has been broken.
• The bears’ control over the trend may increase if the prices move towards the $1900 support, which may increase the selling operations to move towards the next psychological support of $1885.
• This is the best place to buy from.
• The movement towards the resistance of $1945 per ounce may be important for the bulls to control the trend again.

I expect the price of gold to continue moving in a narrow range with a downward trend until the reaction to the American inflation figures and the policy decisions of the European Central Bank. The price of gold is getting hurt by the growing global geopolitical tensions and fears of a global economic recession.

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