- Gold futures suffered a sharp sell-off to close out the last trading week as investors booked profits.
- However, the yellow metal is still on track for weekly gains and has maintained its year-to-date rally intact.
- According to gold trading platforms, gold prices have shown signs of reigniting their strong rally since April before running out of steam.
The question now is: Can gold reach $2,400 again?
Last Friday, gold prices plunged from their resistance level of $2369 an ounce to losses that extended to the support level of $2316 an ounce before settling around $2321 an ounce at the start of trading this week. In general, gold achieved its second consecutive weekly gain of around 0.8% and is up about 13% year-to-date. In the same performance, prices of silver, gold's sister commodity, collapsed to $29.65 an ounce. Overall, the white metal will still enjoy weekly gains of 2%, in addition to its year-to-date rise of over 23%.
In general, the leading metals markets benefited this week from weak economic data.
According to economic calendar data, US retail sales rose at a slower-than-expected pace of 0.1% in May, while April figures were revised down. Industrial and manufacturing production data came in better than expected, although April figures were revised down. Initial jobless claims were higher than consensus estimates, while various regional central bank indices remained stuck in the contraction zone. However, the flash June readings for the S&P Global manufacturing, composite and services PMI surveys beat estimates.
Meanwhile, the Conference Board’s leading economic indicator fell by 0.5%, worse than economists’ expectations of -0.3%.
This new week, the final reading of the US GDP for the first quarter will be released, and it is still expected to show a reading of 1.3%. Overall, with inflationary pressures easing and the US economy slowing, the Federal Reserve is well positioned to cut US interest rates. But monetary policymakers insist that they still need to wait for more evidence to be confident that inflation is returning to the central bank’s 2% target.
Overall, the futures market is betting that the US Federal Reserve will pull the trigger on the first 25-basis-point rate cut at the FOMC policy meeting in September, according to the CME FedWatch tool.
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Meanwhile, the US Dollar Index (DXY), a measure of the greenback against a basket of major currencies, rose to 105.82. Overall, the index rose 0.25% last week and is up 4.42% year-to-date. As is well known, a stronger US dollar is bad for dollar-denominated commodities because it makes them more expensive for foreign investors to buy. Another factor affecting the gold market is that US Treasury yields have mostly risen, with the yield on 10-year bonds rising above 4.26%. The yield on 2-year bonds reached 4.74%, while the yield on 30-year bonds exceeded 4.4%.
Gold Price Forecast and Analysis Today:
Despite the recent sell-off that gold price was exposed to last Friday, gold price has a chance to complete the last upward channel if prices return to the resistance levels of $2355 and $2370 per ounce, respectively. In contrast, according to the performance on the daily chart, the support at $2300 per ounce will remain the most important for bears to control, and at the same time, it will move prices towards new support and buying levels. Finally, we still prefer to buy gold from every downward level.
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