- As is the case with other markets and trading products, the gold price has been moving in very narrow ranges since the start of trading this week in light of the American holiday, which weakens liquidity in the markets and makes investors reluctant to take risks until everyone returns to the markets.
- During yesterday's trading session, the gold price settled in a range between the $1920 support and $1931 an ounce.
- It settled around the level of 1925 dollars an ounce at the time of writing the analysis.
Gold prices rose at the beginning of this week's trading, as both the US dollar and Treasury bond yields declined because of weaker economic readings, which cast doubts about whether the Federal Reserve might adhere to its strict political expectations.
“The gold price likely found strong support around $1,900,” said Edward Moya, senior market analyst at OANDA in a note to Reuters, “there is some positioning happening here… and it seemed like last week the market was slowly pricing in more rate hikes, but the data going forward may suggest that this may not happen, and we could get another rate hike,” he added.
Supporting safe-haven gold, the spread between the two-year and 10-year US Treasury yields reached its widest range since 1981, reflecting fears that the Fed's extended tightening cycle will push the US economy into recession. Meanwhile, futures markets have reflected on the interest rate cuts at the Federal Reserve's recent September meeting in May, and now expect the first cuts to come in January.
The gold market also got a boost from the decline in the value of the US dollar after data showed manufacturing in the US fell in June. Carlo Alberto de Casa, an analyst at Kinesis Money, said that given that gold prices could trade in the $1,900-$1,930 range ahead of the release of the June 13-14 Fed meeting minutes may contain more clues about policy.
Gold Technical Outlook
There is no change in my technical view of the performance of the gold price, as the bearish pressures are still the strongest, and according to the performance on the daily chart below, the bears' control over the trend will strengthen, in the event that the price of gold moves towards the support levels 1910 and 1885 dollars, respectively. On the other hand, over the same time period, the movement of the XAU/USD (gold) price toward the resistance level at $1970 an ounce will be important for the bulls to regain control of the trend.
The price of gold will continue to move cautiously until the reaction of the markets and investors to the announcement of the content of the minutes of the last meeting of the US Federal Reserve, ending with the announcement of the US job numbers.
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