- Gold prices have been under selling pressure since mid-last week, falling below the $2,326 support level and settling around $2,336 per ounce at the time of writing.
- Recently, the price of gold fell from the historical resistance of $2,450 per ounce, recorded in the first trading session of last week.
According to the platforms of gold trading companies, the price of gold fell to its lowest level in more than two weeks, with increasing investor concerns about the timing of reducing interest rates in the United States of America and the recent strength in commercial activity in the United States. Thus, this decline in the price of gold comes days after the spot price reached a record level of $2,449.89 amid optimism about the Federal Reserve’s monetary policy. Making gold bullion less attractive, US business activity accelerated to its highest level in more than two years in May, indicating an uptick in economic growth during the second quarter.
However, the price of the yellow metal - gold - has risen by 14% so far this year amid expectations of an interest rate cut from the Federal Reserve along with escalating geopolitical tensions around the world.
Will the price of gold fall much in the coming days?
In this regard, Daniel Ghali, a commodity market analyst at TD Securities, said in a note to Reuters that the rising US dollar and weakening expectations for US interest rate cuts have prompted a round of profit-taking in gold, but the downside is likely to be limited. While the current policy response may "include maintaining" interest rates at current levels, the recent Federal Reserve minutes reflect discussions about the possibility of raising interest rates.
The analyst added, “Investors who care about the Fed’s expectations do not invest in gold for a long time.” They missed the rally and in turn didn’t have much gold to sell. “So, while we think gold prices are seeing a correction here, it will be relatively superficial.”
For its part, UBS recently raised its gold price forecast to $2,600 for the end of 2024, citing a series of weak US data for April, upwardly revised central bank demand for gold and ongoing geopolitical uncertainties. Meanwhile, imports into India, the world's second-largest gold consumer, may fall by about a fifth this year, as rising prices spur retail consumers to replace old jewelry with new items, according to the industry body.
According to stock trading platforms, the S&P 500 US stock index rebounded ahead of the long weekend, rising 0.7% on Friday, while the Nasdaq Composite Index closed at a new record high, driven by higher AI stocks. In contrast, the Dow Jones Industrial Average remained weak, falling more than 600 points the previous day. Also, investors had assessed new data showing that new orders for US manufactured capital goods unexpectedly rebounded in April and that consumer sentiment in Michigan showed lower-than-expected consumer inflation expectations.
By trade and among stocks, Nvidia shares reached an all-time high of $1,064, up 2.4% after a 9.3% jump in the previous session, adding more than $218 billion to their market value. The lover of artificial intelligence exploded with optimistic quarterly results last Wednesday that strengthened investor confidence in major technology companies' bet on artificial intelligence. In the same path, megacap stocks such as Apple, Alphabet, and Meta rose by between 0.9% and 2.6%.
Over the course of the week, the S&P 500 index fell 0.3%, the Dow Jones index fell 2.3%, snapping a 5-week winning streak, while the Nasdaq index added 0.7%.
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Gold Price Forecast and Analysis Today:
The price of gold may remain stable around its recent losses. It is not expected to breach the $2,300 support unless the dollar price gains more strength from the US inflation reading this week, which is favored by the US Federal Reserve. Below this level, gold investors may consider seizing opportunities to return to buying gold again, as global geopolitical tensions and more central bank purchases of gold continue to support prices.
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