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- Gold futures crossed $2,000 an ounce for the first time since the end of July, driven by the war in Israel, a weak US dollar, and the potential end of US interest rate hikes by the Federal Reserve.
- Before that, the price of the yellow metal was in a state of dispersion since it fell below the level of $1,900 an ounce late last month.
- According to the trading data, the price of gold XAU/USD has risen towards the resistance level of $1997, its highest level in five months, and the week's trading closed stable around the $1980 per ounce level.
Metal Markets Benefit From Safe Haven Trading
On weekly basis, the price of gold achieved weekly gains of approximately 3%, which adds to its rise since the beginning of the year 2023 until now by approximately 10%. In the same performance, the prices of silver, the sister commodity to gold, rose for the first-time last week. Similarly, Silver futures rose to $23.74 per ounce. Accordingly, the white metal will also record a weekly increase of about 4%, reducing its losses since the beginning of the year to less than 2%.
In general, metal markets benefit from safe haven trading, as investors seek shelter amid global conflicts, especially in Israel. Also, the investors are concerned that the war between Israel and Gaza will intensify and spread to other parts of the region, which could bring Iran into the conflict. In addition to fear trading, investors were excited by the news that the Federal Reserve may finish raising US interest rates. While Fed Chairman Jerome Powell does not believe monetary policy is restrictive enough, he acknowledged that high interest rates affect everyone.
However, US inflation is very high, and below-trend economic growth and softer business conditions will be necessary to bring inflation back to the Fed's 2% target. “Inflation remains very high, and a few months of good data is just the beginning of what it will take to build confidence that inflation is moving sustainably toward our goal,” Powell said in prepared remarks at the Economic Club of New York. “We cannot yet know how long these low readings will continue, or where inflation will settle over the coming quarters.”
Meanwhile, the US currency fell at the end of last week's trading, with the US Dollar Index (DXY) falling to 106.16, from opening at 106.26. The index, which is a measure of the US currency against a basket of other major currencies, is preparing for a weekly loss of about 0.5%, but it is still up 2.5% so far in 2023.
Substantially, a weaker US dollar is beneficial for dollar-denominated goods because it makes it cheaper for foreign investors to buy them. US Treasury yields fell across the board, with the 10-year bond yield falling 8.1 basis points to 4.907%. The yield on two-year bonds fell by 10.4 basis points to 5.067%, while the yield on 30-year bonds fell by 2.6 basis points to 5.074%. As it is known, gold is sensitive to interest rate movements because it can affect the opportunity cost of owning non-yielding bullion.
Finally, for other metal commodity prices, copper futures fell to $3.575 per pound and Platinum futures rose to $909.40 an ounce. Also, Palladium futures fell to $1,113.00 an ounce.
Gold Price Forecast Today
According to the performance on the daily chart below, the price of gold, (XAU/USD) is still bullish and testing the historical psychological resistance level of $2000 per ounce confirms the dominance of bulls in the trend. At the same time, technical indicators are pushing towards strong overbought levels.
However, it must be considered that the continuation of geopolitical tensions, led by the oil-rich Middle East region, will support the price of gold to move towards higher peaks, the closest of which are currently 2015 and 2025 dollars per ounce. On the other hand, over the same period, if geopolitical tensions calm down and the US dollar returns to its gains, the gold price I expect a quiet trading session by considering an empty economic calendar, but investor sentiment and the performance of global markets will have an impact on the price of gold today.
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