Gold May be Facing Important Top

The gold market in general is sensitive to movements in interest rates because they can affect the opportunity cost of holding non-yielding bullion.

XAU/USD gold prices held steady at their best levels since mid-June, driven by lower-than-expected US inflation. The price of the yellow metal has been declining since it hit record highs last summer. However, as investors shifted their expectations about the US Federal Reserve’s interest rate decisions.

• According to the trading, the XAU/USD gold price rose towards the $1960 resistance level.
• In general, gold prices are on the right track to achieve weekly gains of 2%, in addition to an annual increase of 7.3%.
• In the same performance, the price of silver, the sister commodity of gold, topped the top of $24 an ounce.
• The price of the white metal is preparing for a weekly jump of about 4%, to erase its losses since the beginning of the year 2023 to date, and slip into the positive zone.

On the economic side, according to the Bureau of Labor Statistics, the annual inflation rate in the United States eased to 3% in June, down from 4% in May, and to the lowest level since March 2021. This also came in below the consensus estimate of 3.1%. The Consumer Price Index (CPI) rose 0.2%, up from 0.1% and below market expectations of 0.3%. Core US inflation, which cuts down on the volatile food and energy components, slowed to 4.8%, down from 5.3% and revised down to 5%, economists’ expectations. Core CPI jumped 0.2%, down from 0.4%, from May to June.

Overall, the impeccable US inflation data has led investors to expect that the Federal Reserve will refrain from raising US interest rates twice this year. Instead, the US central bank can only pull the trigger to raise interest rates at this month’s FOMC policy meeting.

Accordingly, inflation figures led to the collapse of the US dollar to its lowest level since April 2022. The US dollar index (DXY), which measures the performance of the US currency against a basket of other major currencies, fell to 100.54, from an opening of 101.73. From the beginning of the year 2023 to date, the US Dollar Index DXY has decreased by approximately 3%.

A weaker amount is beneficial for dollar-denominated commodities because it makes them cheaper for foreign investors to buy.

On the other hand, affecting the gold market. The US Treasury market was red across the board, with the 10-year yield dropping 12.1 basis points to 3.861%. The value of the two-year notes fell 15.6 basis points to 4.74%, while the 30-year yield fell 7.1 basis points to 3.95%.

The gold market in general is sensitive to movements in interest rates because they can affect the opportunity cost of holding non-yielding bullion.

In other metals markets, copper futures rose to $3,854 a pound. Platinum futures advanced to $958.90 an ounce. Palladium futures rose to $1280.00 an ounce.

According to the performance on the daily chart below, the rebound gains for gold price XAU/USD requires moving towards the resistance level of $1975 an ounce. This confirms the bulls’ control and brings the gold market the opportunity to move towards the next psychological resistance level of $2000 an ounce. On the other hand, and over the same period of time, the return of the gold price to the $1920 support level will be important to confirm that the bears’ strongest and continuous control.

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