Gold futures appeared to start 2023 well by testing the $1850 resistance. The precious metal generated exceptional momentum as the new year approached, erasing all its losses in 2022 and stabilizing.
Can XAU/USD gold prices flirt with the $1900 level in the first quarter?
During yesterday's trading, the XAU/USD gold price rose towards the $1850 resistance level. The recovery of the US dollar had an effect on halting the gains, and it returned to stability around the $1835 level at the time of writing the analysis.
In the same performance, silver prices, the sister commodity to gold, rose to welcome the new year down to $24,595 an ounce. In general, the white metal also erased all its losses in 2022 and achieved an annual gain of about 8%.
The metals market rose, despite the dollar's rise in the first trading session of 2023.
By performance, the US dollar index (DXY), a measure of the US currency's performance against a basket of other major currencies, rose to 104.51, from an opening of 103.66. All in all, the index had a great year, up nearly 9%. But it rose as much as 20% before paring its gains with the Fed's less hawkish policy.
The price of the strongest bet is usually bearish for dollar-denominated commodities because it makes it more expensive for foreign investors to buy.
Other factors affecting the gold market
US Treasury market yields were mostly in the red across the board, with the benchmark 10-year yield dropping 8.6 basis points to 3.745%. One-month bond yields rose 2 basis points to 4.024%, while the 30-year yield fell 9.4 basis points to 3.844%. Yield margins have widened over two and ten years of recession to close to -70 basis points.
Commenting on performance. “Inflation concerns, central bank monetary policies and the Russia-Ukraine war are likely to remain near the first market position in 2023,” Jim Wyckoff, metals analyst at Kitco News, wrote in a note. “From a technical point of view, gold futures bulls generally have a strong technical advantage in the near term. The price has been in an upward trend for 2 months on the daily chart. The bulls' next bullish price target is to achieve a close in the February futures contracts above the strong resistance at $1900 an ounce. The bears' next bearish price target in the near term is to push futures prices below the strong technical support at $1,775. The first resistance was seen at $1850 and then the day's high at $1856. The first support appears at the lowest level at $1832, then at $1818.”
In the meantime, investors will be closely watching this week's December US jobs report, which could offer two things: the labor market is slowing, and a headline number could support the Federal Reserve to slow the pace of interest rate hikes.
In other metals markets, copper futures rose to $3,822 a pound. And platinum futures contracts rose to 1093.00 dollars an ounce. Palladium futures fell to $1,791.50 an ounce.
XAU/USD gold price forecast today:
- Despite yesterday's selling, gold prices XAU/USD are still bullish.
- As I mentioned before, as long as prices are above the psychological resistance at $1800 an ounce, move towards the resistance level at $1850.
- Move some technical indicators towards overbought levels, and after that area, the resistance levels will be $1865.
- 1877 dollars are the next targets for gold bulls, which are good opportunities to think about selling gold.
On the other hand, over the same time period, the general trend of gold will not turn bearish without moving towards the support level at $1775 an ounce. The price of gold will remain in waiting mode until the reaction from the US Federal Reserve minutes and US job numbers.
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