- At the start of trading this week, gold futures slipped, supported by rising US Treasury yields.
- Investors are also closely watching two key developments this week: US retail sales data and public statements from Federal Reserve officials.
- Obviously, the possibility of a rate cut is on the horizon, traders are picking up on any data point to pinpoint when the first cut will come.
According to gold trading companies’ platforms, gold futures fell to $2,337.10 per ounce. Overall, the yellow metal is achieving weekly gains of 0.4%, in addition to its annual gains since the beginning of the year of about 13%.
In the same performance, silver prices, which is gold’s sister commodity, rose to $29,505 per ounce. Overall, the price of the white metal fell by more than 1% last week, but it will remain up near 23% in 2024. The main catalyst to start the trading week was the sea of green in the US Treasury market. Also, the yield on the 10-year note rose 7.8 basis points to 4.291%. The yield on the 2-year note rose 6.8 basis points to 4.753%, while the yield on the 30-year note rose 7.9 basis points to 4.43%.
This comes after Minneapolis Federal Reserve President Neel Kashkari indicated that the "reasonable" forecast would be for the Fed to cut US interest rates in December. Also, Kashkari told CBS's Face the Nation program on Sunday: "We need to see more evidence to convince us that inflation is on its way back to 2%."
Kashkari added: "We're in a very good position right now to take our time and get more inflation data and get more data on the economy and the labor market before we have to make any decisions." And "we're in a strong position, but if I just said there was going to be one cut, which is what the average has been suggesting, it's more likely to be towards the end of the year."
Also weighing on the gold market, the US dollar index (DXY), a measure of the greenback against a basket of major currencies, fell to 105.47, from an opening of 105.55. controversy, the index rose 0.3% last week and is up more than 4% year-to-date. A weaker dollar makes it cheaper for foreign investors to buy dollar-denominated gold.
If US retail sales data comes below expectations, it could be a boon for gold prices. On the outlook for gold prices, Kyle Rodda, a financial markets analyst at Capital.com, said: “With some signs of weakness emerging in the US economy, which could weaken the US dollar. Also, increase expectations for future rate cuts, gold prices are in a great position to benefit from it.”
The consensus forecast for US retail sales is for a 0.2% growth in May.
Elsewhere, gold demand in India was tepid last week, while premiums in China, the largest consumer, declined due to weak sentiment and higher spot prices.
Gold Price Forecast and Analysis Today:
According to the performance on the daily chart above, gold is on a neutral path and the bias will be more bearish if it returns to the $2,300/oz support area and below. If the US dollar gains positive momentum, gold could head towards the $2,285/oz and $2,260/oz support levels respectively. Currently, we still prefer to buy gold from every downside level. In contrast, on the same time frame on the daily chart, the $2,355/oz resistance level will be important for bulls to regain control.
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