- As expected, gold prices rose to around $2,425 an ounce during trading on Wednesday, paring earlier losses driven by safe-haven demand amid fears of an escalation in the Middle East conflict.
- Meanwhile, the Bank of Japan unexpectedly raised its short-term interest rate to 0.25% from its previous range of 0% to 0.1%.
- Investors are now focused on the Federal Reserve’s policy meeting later in the day, where the central bank is expected to maintain rates.
According to reliable trading platforms, investors are looking ahead to the upcoming policy meetings of major central banks this week. The Federal Reserve is expected to keep US interest rates unchanged on Wednesday, but all eyes will be on any signs of a potential rate cut in September. Meanwhile, opinions are divided on whether the Bank of England will start cutting borrowing costs. Traders are also preparing for other key US data this week, with non-farm payrolls a key focus. The US economy is likely to add a total of 185,000 jobs this month, down from 206,000 in June, while the unemployment rate is likely to remain at 4.1%, matching its 2021 high, and wage growth is expected to come in at 0.3%.
As for the factors affecting the gold market, the US dollar index rose above 104.7 on Tuesday, remaining at a two-week high, as investors look ahead to the FOMC monetary policy decision. The Fed is widely expected to keep US interest rates steady on Wednesday, setting the stage for a rate cut in September. Also, investors are awaiting policy decisions from the Bank of Japan and the Bank of England later in the week. Likewise, this week will see the release of important labor market data, including the JOLTS report. The number of job openings was little changed at 8.2 million in June, but slightly above expectations at 8 million. The highly anticipated jobs report is due out on Friday.
Furthermore, the US dollar was broadly higher in trading, but mostly higher against the yen and the British pound.
Another factor weighing on the gold market, the yield on the 10-year US Treasury note pared its previous low and rose above 4.18% on Tuesday after a stronger-than-expected rise, in line with bets that the Federal Reserve will deliver a soft landing and limit the size of the interest rate cuts needed to support the US labor market. The survey showed job openings were little changed at 8.18 million in June, above market expectations of 8 million. The Fed is widely expected to leave interest rates unchanged in its decision today, but markets will be scrutinizing the speech by the Federal Open Market Committee and its Chairman Powell for confirmation that the central bank will start its easing cycle in September. Currently, the market has been priced in three 25bp rate cuts by the Fed this year.
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Gold Price Forecast and Analysis Today:
The bullish trend for gold is gaining strength as we expected and indicated that breaking the psychological resistance of $2400 per ounce is possible. Thus, the bulls will control the trend and with the increase in geopolitical tensions the readiness to gain more will be stronger and currently the closest resistance levels for gold are $2425, $2455 and $2470 per ounce respectively. ultimately, we still prefer to buy gold from every downward level.
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