Gold futures failed to join the rally in global financial markets as investors flocked to stock markets after rising interest rates and increasing recession expectations. As such, the yellow metal failed to benefit from the weakness of the US dollar, but it was able to limit the damage on a wide range of factors. The price of XAU/USD gold fell today to the level of 1828 dollars an ounce before settling around the level of 1838 dollars an ounce. This was before an important event for the global financial markets, which is the testimony of the Governor of the US Federal Reserve, Jerome Powell.
Gold prices rose more than 0.6% over the past week but have stabilized during the year. In the same way, the price of silver, the sister commodity to gold, is steady above the $21 level. In general, the price of the white metal has increased by nearly 3% during the past week, but it has decreased by more than 7% since the beginning of the year 2022 to date.
With the US stock market posting a surprise rally after last week's disastrous performance, the demand for traditional safe-haven assets has fallen. However, market analysts believe that there are fundamental factors supporting gold as it is trading in the $1850 range an ounce. Commenting on this, Fouad Razakzadeh, market analyst at City Index and FOREX.com, wrote in a research note. “This includes safe haven flows amid the turmoil in the cryptocurrency markets and stock sell-offs over the past few months, as well as demand for an inflation hedge.”
Looking ahead, it may be difficult to predict its performance in the near and medium term. All of this may depend on upcoming inflation readings, interest rates, and China's policies on COVID. There are other factors affecting the gold market. The US Treasury market was green across the board, with the benchmark 10-year bond yield rising 6.6 basis points to 3.305%. One-year yields rose 6.4 basis points to 2.92%, while 30-year yields jumped 8.6 basis points to 3.379%. The price of gold is generally sensitive to a higher interest rate environment because it raises the opportunity cost of holding non-yielding bullion.
The dollar fell after the holiday trading session. The US Dollar Index (DXY), which measures the performance of the US currency against a basket of major currencies, fell to 104.43, from an opening at 104.70. A weaker US dollar is good for dollar-priced commodities because it makes them cheaper to buy for foreign investors.
In other metals markets, copper futures rose to $4.026 a pound. And platinum futures advanced to $938.90 an ounce. Palladium futures rose to $1,860.50 an ounce.
Despite the continuation of the Russian-Ukrainian war and the continuation of international sanctions:
Switzerland imported gold from Russia for the first time since the invasion of Ukraine, indicating that the industry's attitude toward the country's precious metals may decline. More than 3 tons of gold was shipped to Switzerland from Russia in May, according to data from the Swiss Federal Customs Administration. It was the first shipment between the two countries since February.
The shipments represented about 2% of gold imports to the main refining center last month. It may also represent a change in the concept of Russian bullion, which became a taboo after the invasion. Most refiners swore to accept new gold from Russia after the London Bullion Market Association removed the country's manufacturers from its approved list. While this was seen as a de facto ban on Russian gold from the London market, one of the largest in the world, the rules do not prohibit the processing of Russian metals by other refineries. Switzerland is home to four major gold refineries, which handle two-thirds of the world's gold.
In March, at least two large gold refineries refused to re-melt Russian bullion even though market rules allowed them to do so. Others, such as Argor-Heraeus SA, have said that they will accept refined products in Russia before 2022, as long as there are documents to show that doing so will not bring financial benefit to a Russian person or entity.
Not all five Swiss refineries were immediately suspended for delivering goods when contacted by Bloomberg News. Some buyers remain wary of Russia's precious metals, including the pre-war bullion that is still tradable in Western markets. In palladium, it caused a constant dislocation between spot prices in London and futures in New York, due to the greater risk of receiving bullion from Russia in the latter. Switzerland has been importing small amounts of palladium from Russia - the world's largest mineral miner - since April.
XAU/USD gold price forecast today:
The price of gold today is still facing downward pressure, and it may remain so until the markets and investors react to what will be mentioned in the content of the testimony of the US Federal Reserve Governor Jerome Powell. It will have a strong and direct impact on the performance of the US dollar and, accordingly, the price of gold. The downward trend in the price of gold may increase in strength if prices move towards the support levels 1822 and 1810, respectively, and from the last level and less than it, the appetite for buying gold will be considered.
Bulls will return to control of the XAU/USD gold price if prices return to the vicinity of the resistance levels of 1855 and 1877 dollars, respectively.
