The continued decline in the US dollar, the increase in gold purchases by central banks as they slow the pace of tightening their monetary policy, and the rise in global geopolitical tensions are all factors that have combined to help gold prices (XAU/USD) achieve strong gains recently, reaching the resistance level of $2,018 per ounce, the highest level for gold in six months.
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Will the price of gold decrease in the coming days?
The continued weakness of the US dollar is important for the continued rise in the price of gold. Vice versa. This depends on the reaction of markets and investors to the results of the economic data and hints of the path to raising US interest rates, expressed by Federal Reserve officials this week, led by Jerome Powell, the bank’s governor. It must be considered that performance may include selling operations to take profits. Therefore, one must be careful not to buy gold from strong peaks.
In general, investors are waiting for updates on inflation and how American consumers feel about the economy. Later Tuesday, the Conference Board will issue an update on US consumer confidence, which has remained strong throughout the year. Economists polled by FactSet expect another strong reading for the October report. Next Thursday, Wall Street markets will closely monitor October government data on the Federal Reserve's preferred measure of US inflation. Economists expect this measure to continue to ease, as has been the case since mid-2022.
Investors have become cautiously optimistic that inflation has calmed enough to enable the Federal Reserve to put an end to aggressive interest rate hikes. On the other hand, the overall US economy remained strong enough in the face of rising interest rates and inflation to avoid a recession. Accordingly, analysts said that signs of a slowdown in the US economy, and that conditions in China are still uncertain, are affecting sentiment.
Gold Price Forecast and Analysis Today:
There is no doubt that the recent gains in gold prices (XAU/USD) have been enough to push technical indicators towards strong overbought levels. However, the continued presence of the factors that have driven gold prices higher, as mentioned above, will ensure that the bulls remain in control of the trend for a while. According to the daily chart performance, and as I mentioned before, the psychological resistance level of $2,000 per ounce is a strong catalyst for the bulls to maintain control. Thus, this trend will be tested this week with the release of a package of important US economic data and statements from officials of the US Federal Reserve's monetary policy, which will have a strong impact on the dollar and therefore on gold prices, so caution is advised.
Currently, the closest resistance levels for gold prices are $2,022, $2,032, and $2,040 per ounce, respectively. In contrast, the first break of the current uptrend requires gold prices to move towards support levels of $1,980 and $1,965 per ounce, respectively.
