- Gold futures started the second half of 2023 with modest gains amid stable US dollar prices.
- The yellow metal was trying to reverse the recent bearish trend of the past two months.
- But with the Fed raising US interest rates twice more this year, can gold prices re-test $2,000 again?
At the beginning of this week's trading, the XAU/USD gold price recovered to the $1930 resistance level, before stabilizing around $1921 an ounce, at the time of writing. All in all, the price of gold is relatively stable and is posting a monthly loss of around 2%. From the beginning of the year 2023 to date, the price of gold has increased by approximately 6% as the second half of 2023 approaches.
In the same performance, the price of silver, the sister commodity to gold, topped $23 an ounce before the Fourth of July holiday. Overall, the price of the white metal enjoyed a weekly gain of 1.45% but a monthly loss of 2%. From the beginning of the year 2023 to date, silver prices have declined by more than 4%. Gold prices have fallen steadily since hitting a record high last spring. After finishing above $2,055 on May 4, the yellow metal has struggled to maintain any semblance of momentum. Gold is facing pressure from rising Treasury yields but also enjoying relief from a struggling dollar.
The 10-year yield rose 2.8 basis points to 3.845%. The one-month bond yield was unchanged at 5.19%, while the 30-year yield rose 1.2 basis points to 3.866%. The gold market is generally sensitive to interest rate movements because it can affect the opportunity cost of holding non-yielding bullion.
Another factor affecting gold. The US Dollar Index (DXY) was flat at the start of the brief trading week. The index fell 0.01 percent to 102.90 from an opening of 102.91. The DXY dollar index rose by 0.2% last week but is down about 0.6% year-to-date. A weaker exchange rate is usually good for dollar-denominated commodities because it makes it cheaper for foreign investors to buy.
On the economic data front, the recession of US manufacturers deepened, with both the S&P Global Manufacturing Purchasing Managers' Index and the Institute for Supply Management PMI contracting to 46.3 and 46, respectively. As for other metals markets, copper futures rose to $3.787 a pound. Platinum futures rose to $918.10 an ounce. Palladium futures rose to $1,237.00 an ounce.
Gold Technical Outlook
According to the performance on the daily chart below, the gold price still tends more to the downside and will not find opportunities for a strong rebound unless the contents of the minutes of the last meeting of the US Federal Reserve come to calm down the path of tightening its policy or if the US job numbers came out less than expectations.
As I mentioned before, the resistance at $1970 an ounce will remain the way for the bulls to regain control of the trend, and among them, talk about the psychological resistance at $2000 an ounce will return again. According to the recent performance, the support levels at 1908 and 1885 dollars will be the most important targets for more control of the bears on the direction of gold.
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