- For the third day in a row, the price of gold is trying to rebound higher.
- Its gains stopped at the resistance level of $2,358 per ounce, before settling around the level of $2,352 per ounce at the time of writing the analysis.
According to the platforms of gold trading companies, gold price is recovering from the sharp losses it suffered last week. It reached the support level of $2,326 per ounce, the lowest in two weeks, amid the strength of the US dollar following recent signals from US Federal Reserve officials about the future of raising interest rates. In general, gold prices fell by 3% last week, but remained up by about 14% since the beginning of the year.
In the same performance, Silver, gold's sister commodity, was eyeing $32 as this week's holiday-shortened trading began. In general, there was no significant change in the price of the white metal last week, and prices have risen by 33% so far this year.
Recently, gold prices have declined amid fading speculation about a US interest rate cut by the Federal Reserve. Moreover, a series of economic reports last week showed that business activity in the United States is accelerating and that the labor market remains resilient. Thus, investor bets had indicated growing doubts that the Federal Reserve would cut US interest rates more than once this year, as markets now price a 62% chance of a rate cut by November, according to CME's FedWatch tool.
Meanwhile, attention will be on US personal consumption expenditures (PCE) inflation data due this week, the Fed's preferred measure of inflation, especially after minutes from the Fed's May meeting revealed persistent concerns about flat inflation and a potential downturn among many Officials to raise interest rates if price growth continues.
Overall, the US economy has generally shown continued strength in household spending, but the numbers under the surface may not be encouraging. Concerns about rising inflation rates were behind the difficult trading last week, and after the recent record numbers. Consequently, the weakness began after the Federal Reserve on Wednesday issued the minutes of its latest policy meeting, which showed some officials talking about the possibility of raising interest rates if inflation worsens. Accordingly, stock markets fell further after reports on Thursday indicated that the US economy was stronger than expected. Such strength could scare Wall Street markets as it could keep upward pressure on inflation.
On the geopolitical level, reports showed that more than 30 people were killed in an Israeli raid near a displacement camp in Rafah over the weekend. This provided momentum for the safe haven gold.
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Will the price of gold fall again?
In this regard, Matt Simpson, chief analyst at City Index, told CNBC: “I think that the gold price can manage a slight rebound from current levels before retesting the $2280-2300 area, which may witness an extension of losses if US data continues to outperform.” Added, “With bullish fingers burning at the highs and forcing some to liquidate and others to shift into the bearish camp, I doubt we will see a new high soon as the Fed continues its ‘higher for longer’ narrative with interest rates.”
According to the CME FedWatch tool, the futures market is heading for two US interest rate cuts starting in September or November.
Gold Price Forecast and Analysis Today:
It is expected that the price of gold will continue to bounce higher as global geopolitical tensions increase again, led by anxiety in the Middle East region. Currently, the closest resistance levels for gold are 2367 and 2380, then to the psychological resistance of $2400 per ounce again. Finally, we still prefer to buy gold from every falling level.
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