For five consecutive trading sessions, gold prices (XAU/USD) continue to rise strongly, reaching gains that have surpassed the $2052 resistance level per ounce as of the time of writing. Nearby, this marks the highest point for the yellow metal in six months. Recently, Gold's robust gains are fueled by a decline in the U.S. dollar's value and expectations that the Federal Reserve has concluded its pace of interest rate hikes. As a result, bond yields have decreased, with the 10-year Treasury yield impacting mortgage rates falling to 4.37% from 4.39% late on Monday. Meanwhile, the yield on two-year Treasury notes, a gauge of expectations for Federal Reserve actions, also notably dropped to 4.78% from 4.89% late on Monday.
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Will the Gold Price Decline in the Coming Days?
Commenting on this, Jim Wyckoff, Senior Analyst at Kitco Metals, stated in a note to Reuters that the price of gold remains bullish in the short term. Therefore, with the U.S. Dollar Index (DXY) trending downward, with the hope that the Federal Reserve will not raise U.S. interest rates anymore and may even cut rates by spring. However, Wyckoff added, "If U.S. gross domestic product (GDP) numbers and inflation indicators are stronger than expected, it will weaken trader enthusiasm for the alloys." On the other hand, Lukman Otunuga, Senior Research Analyst at FXTM, stated, "Cautious sentiment ahead of another busy week for global financial markets also provides support for the precious metal. Given the difficulty of overcoming the $2000 level, gold could end up falling without a strong fundamental catalyst."
Generally, traders widely expect the Fed to leave US interest rates unchanged in December and expect a roughly 50% chance of cuts in May next year, CME's FedWatch tool shows. And on the bank policy front. Furthermore, US Federal Reserve Governor Christopher Waller said he is “increasingly confident” that policy is in the right place. Also, the Federal Reserve is scheduled to meet again in December to update US interest rate policy. Moreover, the central bank has been raising interest rates to push inflation down to 2% and close to that target. Obviously, inflation fell from its peak of 9.1% in June 2022 to 3.2% in October.
concurrently, Wall Street markets are also increasingly betting that the Fed could begin cutting interest rates from their highest level in two decades by mid-2024.
On the other side, to make the price of bullion less expensive for foreign buyers, the US dollar index (DXY) touched its lowest levels since mid-August. According to these trades, investors will monitor the US Personal Consumption Expenditures (PCE) data tomorrow, Thursday, which is the Federal Reserve’s preferred US inflation indicator. Also, the focus will be on revised US third-quarter GDP figures, which will be released later on Wednesday.
Gold Price Forecast and Analysis Today:
According to the daily chart performance below, gold prices (XAU/USD) are still on their strong uptrend, supported by breaking the psychological resistance level of $2,000 per ounce. Recently, Bulls' eyes are now set on the all-time high of $2,070 per ounce. Thus, this could happen if the US dollar continues to weaken following the release of the results of US economic data. Aso, this led by the reading of US economic growth and the reading of the Federal Reserve's preferred inflation. However, if the statements of the Federal Reserve officials calm the pace of raising US interest rates. Technically, recent gains have moved some technical indicators towards strong overbought levels, and unless gold gains more momentum. Therefore, Gold could be exposed to profit-taking selling. The first level in this case, breaking of the psychological resistance level of $2,000 per ounce.
