Following the performance of last week, the XAU/USD gold price continues to move in its downward trend with losses that extended today to the support level of $1,976 per ounce. Obviously, the lowest level for gold price in three weeks, and stabilizes around the level of $1,987 per ounce at the time of writing the analysis. Recently, the awaiting of the reaction to a package of important and influential economic data as well as announcements of the policies of the world's central banks led by the US Federal Reserve. Despite the performance, so far this month, gold prices have risen by 2.3% and have risen by 9% since the beginning of the year to date.
Recently, gold futures fell below $2,000 as the price of the yellow metal continued to decline after hitting a record high. Also, gold prices have fallen by more than 2.5% in the past week but have remained high during the year. Obviously, thanks to expectations that the US Federal Reserve will loosen monetary policy. In the same performance, silver prices, the sister commodity to gold, continued to move towards the $23 per ounce level. In general, the price of the white metal has fallen by 7% in the past week and has fallen by 4% since the beginning of the year to date.
The question now: Will the price of gold decrease in the upcoming days?
Remarkably, after reaching a record high above $2,130 an ounce earlier this month. The price of gold began a free fall, driven by investors taking profits and the rise in the price of the US dollar. Despite expectations that the Federal Reserve will cut US interest rates early next year, the gold market will likely be looking for the next catalyst to spark another rally.
Prodigiously, the futures market expects a temporary interest rate pause at the Federal Open Market Committee (FOMC) policy meeting this month and then a rate cut as early as March. However, US Treasury bond yields were mixed at the beginning of the trading week, with the ten-year bond yield stable at 4.245%. recently, the yield on two-year bonds rose half a basis point to 4.731%, while yields on 30-year bonds settled at 4.33%.
As is known, gold is sensitive to interest rate movements because it affects the opportunity cost of owning non-yielding bullion.
Another factor affecting the gold market, the US Dollar Index (DXY), which is a measure of the US currency against a basket of other major currencies, rose just above 104.00. Exceedingly, the index has increased by 0.55% since the beginning of the year to date and decreased by 1.5% during the past month. As is known, the rise in the value of the dollar is bad for goods priced in dollars because it makes it more expensive for foreign investors to buy them.
Overall, the price of gold can still trend lower because the Relative Strength Index (RSI) is at around 45, which is considered to be in the neutral zone. Therefore, any move above the 70 level indicates overbought conditions, while a level below 30 indicates oversold. As for other metal markets, copper futures fell to $3.7865 per pound. Platinum futures fell to $917.50 an ounce. Palladium futures rose to $968.00 per ounce.
Gold Price Forecast and Analysis Today:
Gold price XAU/USD abandons the psychological resistance level of $2,000 per ounce, giving the bears a chance to take control. As we mentioned before, the support level of $1,985 per ounce will be the starting point, and indeed, the price has collapsed to below it, reaching $1,975. Tremendously, Gold prices may remain under downward pressure until the markets, investors, and the dollar react to the announcement of US inflation figures today. Also, the announcement of the US Federal Reserve at the end of the week. Clearly, the bank's confirmation of its continued tightening of policy, along with stronger inflation figures, will give the dollar more strength. Thus, there is more downward momentum for gold, with losses that could reach the next strongest support level of $1,945 per ounce.
Conversely, bulls may find an opportunity to move above the psychological resistance of $2,000 per ounce again.
