The pressure continued on the US dollar despite the high US inflation rates. Therefore the price of gold, XAU/USD, remained stable in the general bullish trend.
Gains reached the resistance level of $2048 an ounce, and settled around the level of $2030 an ounce, at the time of writing the analysis. In addition to the decline in the price of the dollar, the gold market got additional impetus from the increase in global geopolitical tensions and the threat of the US economy faltering from the debt issue.
US inflation showed signs of abating in April, giving the Federal Reserve room to halt interest rate increases soon. A Bureau of Labor Statistics report on Wednesday showed that the consumer price index rose 4.9 percent less than expected from a year earlier, the first reading below 5 percent in two years. Excluding food and energy, the so-called core consumer price index slowed slightly. But a narrower measure of price often cited by Fed officials — tracking services that have rebounded as the pandemic faded — recorded the smallest monthly increase since mid-2022, as airfares and hotel prices fell.
Accordingly, US stock futures jumped, Treasury bond yields rose, and the dollar weakened after the report.
The report notes that US inflation is cooling with one-year interest rate hikes and recent credit pressure making their way through the economy. However, overall prices are still rising at a rapid pace and the job market remains strong. The Fed would need to see more than a month's worth of data to be confident that price pressures are on a sustained downward trajectory, especially after officials hinted last week that they may be done hiking for the time being.
However, yesterday's report will be one of several factors in policymakers' decision next month. They will also receive the Consumer Price Index for May, as well as reports on the labor market and their preferred measure of inflation, the personal consumption expenditures index. In addition, officials are still watching the ongoing banking pressure and to what extent this will lead to further tightening of credit conditions.
Several key components of US inflation moderated in April, as prices for airfare, hotel stays, and new cars fell. Shelter costs, the largest component of services and making up about a third of the overall consumer price index, rose 0.4 percent last month, the smallest in more than a year. Because of the way housing metrics are calculated, there is a huge gap between real-time price changes and government statistics. Other metrics suggest these will change soon, but economists are divided on the exact timing.
Excluding food and energy, commodity prices rose 0.6 percent in April, the biggest rise since June. Used car prices - the main driver of slowing price growth in recent months - have rebounded to their highest levels in nearly two years.
XAU/USD gold price forecast today:
- There is no change in my technical view of the performance of the XAU/USD gold price, as stability is above the psychological resistance at $2000 an ounce.
- This will remain a strong support for the bulls' control over the trend.
- In general, the decline in the US dollar, the increase in global geopolitical tensions, and fears of a global economic recession will remain important factors for the continuation of the bullish trend for gold.
Currently, the closest levels of resistance to further control of the bulls are 2035, 2047, and 2070 dollars, respectively, which are sufficient for the technical indicators to move towards strong overbought levels. On the other hand, breaking the support levels of 1997 and 1985 dollars will be important to start a downward trend change. US inflation figures and agreement on the amount of US debt are the most important factors influencing gold in the remainder of the week's trading.
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