At the beginning of this week's trading, gold futures prices rose before the important US inflation data this week. The yellow metal has been falling since hitting record highs again, mainly driven by easing fears of banking turmoil.
Can gold price move towards the resistance at $2070 an ounce all the time again?
The answer to that: It may depend on the US Consumer Price Index for April (CPI).
Before that, XAU/USD gold price rose towards the $2029 resistance level, and it had fallen towards the $1999 level on Friday, following stronger US job numbers. Gold prices began to exit from their weekly gains by about 2%, which led to an increase in their rise since the beginning of the year 2023 to date by about 11%.
In the same performance, silver prices, the sister commodity to gold, remained below $ 26 an ounce. In general, the price of the white metal enjoyed weekly gains of 2.3%, bringing the increase since the beginning of the year 2023 to date to nearly 7%.
All focus over the next couple of days may be on inflation data for the month of April.
The annual US inflation rate is expected to remain unchanged at 5%, while the core consumer price index, which wipes out the volatile food and energy sectors, is expected to decline to 5.5%. On a monthly basis, the CPI and core CPI are expected to have increased by 0.4%. There are concerns among financial analysts that if US inflation is higher than expected, it could force the Fed to reassess its strategy to halt the tightening cycle, which would be good news for the US dollar and bad news for the metals market.
Meanwhile, experts say recession fears are supporting the gold market. In this regard, Han Tan, senior market analyst at Exinity, told CNBC, “The price of gold remains supported because markets remain wary of more financial instability in the United States, which would only amplify recession risks in the United States. And if problems between regional banks return to the spotlight, this could raise the bar for this safe-haven asset.”
The US Treasury bond market was mixed at the beginning of this week's trading, as the benchmark yield for ten-year bonds rose 5.5 basis points to 3.501%. One-month yields fell 3.9 basis points to 5.423%, while 30-year yields rose six basis points to 3.822%.
Gold is usually sensitive to movements in interest rates because they can affect the opportunity cost of holding non-yielding bullion.
Other factors affecting the gold market
The US Dollar Index (DXY), a measure of the US currency against a basket of other major currencies, settled at 101.20. The DXY fell 0.9% last week and is down about 2.2% year on year. In general, a stronger US currency can affect dollar-denominated commodities, making them more expensive for foreign investors to buy.
In other metals markets, copper futures rose to $3.9195 a pound. Platinum futures rose to $1,093.90 an ounce. Palladium futures rose to $1,565.50 an ounce.
XAU/USD gold price forecast today:
- The general trend of XAU/USD gold price is still bullish as long as prices are stable around and above the psychological resistance of $2,000 an ounce.
- The weakness of the US dollar, the increase in global geopolitical tension.
- Fears of global economic recession will remain important factors for the continuation of the bullish trend.
- Currently, the nearest resistance levels for more 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.
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