At the beginning of trading this week Gold futures rose slightly, supported by a weaker US dollar. However, higher Treasury yields, and a quiet week of data kept a lid on the yellow metal. Meanwhile, investors will watch Fed Chairman Jerome Powell's much-anticipated speech at the end of the week warily. According to the trading, the XAU/USD gold price rose towards the level of $1900 an ounce, at the time of writing the analysis, recovering from recent strong losses that affected the support level of $1885.
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All in all, gold prices are retracing a weekly loss of 1%, trimming their annual gains to just over 5%. In the same performance, silver prices, the sister commodity to gold, rose to $23.36 an ounce. The price of the white metal rose by 3% last week, but is still down by more than 3% since the beginning of the year.
All was quiet on the economic data front on Monday, with traders focusing more on the US dollar and the US bond market. In this regard, the US Dollar Index (DXY), a measure of the US currency's performance against a basket of other major currencies, declined to 103.30, from an opening of 103.38. The index jumped 0.1% last week and has been relatively stable for the year. A weak US dollar is good for dollar-denominated commodities because it makes them cheaper for foreign investors to buy.
On the other hand, it affects the market. Treasury yields rose across the board, with the 10-year yield advancing 8.7 basis points to 4.338%. The yield on the two-year note rose 5.4 basis points to 4.99%, while the yield on the 30-year note rose 7.4 basis points to 4.453%.
Gold is usually sensitive to movements in interest rates because they can affect the opportunity cost of holding non-yielding bullion.
Important event for investors and markets ahead
The US Federal Reserve, led by Jerome Powell and other central bank governors, meets on Friday in Jackson Hole, Wyoming, for an economic symposium. Investors are waiting for clues to determine the course of monetary policy in the near term. This can help investors learn how to trade forex, stocks and commodities market.
As for other metal commodity prices, copper futures rose to $3.7235 a pound. Platinum futures rose to $916.00 an ounce. Palladium futures fell to $1,242.00 an ounce.
It is worth noting that the price of gold is facing difficulties even after some important news about the US economy. While the country's budget deficit is skyrocketing, some of the major buyers of US debt are starting to cut back on their stake. China, the second largest holder of US debt, cut its share to its lowest level in more than 14 years. It now holds about $850 billion in US debt, down from an all-time high of over $1.2 trillion. Saudi Arabia also dumped US Treasury bonds. It sold more than $3 billion worth of bonds in July, the third month in a row. It now owns $108 billion. These countries are now moving that money into other assets, including gold. Other notable buyers of gold are the central banks of Türkiye and India.
Gold price forecast today:
- The daily chart is showing that the gold price XAU/USD has been sold off in the past few months.
- It has now surpassed the important support level at $1,957, the high of February 3rd.
- It also moved below the important 50-day moving average and the critical support at $1,885.
Accordingly, the Relative Strength Index (RSI) and the Stochastic Oscillator have drifted lower. Therefore, the outlook for gold price is bearish, with the next important support level at $1800. But in the long run, gold is likely to bounce back as demand for gold from global central banks picks up.
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