By the end of last week's trading, gold futures contracts cut off a series of losses that lasted for nine days. The XAU/USD gold price rose towards the level of 1897 dollars an ounce, after strong losses for the same week that affected the support level of 1885 dollars an ounce, the lowest price in five months. It closed the week's trading stable around the level of 1889 dollars an ounce. The limited gains were driven by the decline in the US dollar and treasury yields. In general, the yellow metal was pressured by better-than-expected economic data and growing expectations that the Federal Reserve may raise US interest rates again before the year ends due to "significant upside risks to inflation."
All in all, the XAU/USD gold price posted a weekly loss of around 1.1%, paring its annual gains to around 5%. In the same performance, the price of silver, the sister commodity to gold, is looking to touch $23 an ounce. In general, the price of the white metal is on its way to achieving a tempid weekly gain of 0.1%, but the commodity is still down by about 6% since the beginning of the year 2023 to date.
XAU/USD gold prices were in a nine-day losing streak, the longest since March 2017. The main reason was the sharp rise in Treasury yields and the return of US dollar gains. By trading, the 10-year US Treasury yield recently rose to its highest level since October 2007. However, it eased on Friday, dropping 7.7 basis points to 4.231%. The overall Treasury market is in the red across the board, including the two-year yield, which fell by four basis points to 4.921%.
The gold market is usually sensitive to price movements because they can affect the opportunity cost of holding non-yielding bullion. "The recent renewed rise in US yields dampens investor interest, among speculative short-term financial investors and ETF investors," Barbara Lambrecht, commodities analyst at Commerzbank, said in a research note. In this environment, physical demand in Asia can do nothing to help, and China's gold imports are unlikely to move prices.
Other factors that affect the gold market
The US Dollar Index (DXY), a measure of the greenback against a basket of other major currencies, fell to 103.42, from an opening of 103.57. The DXY has gained more than 2% this month and will enjoy a weekly boost of around 0.5%. Fom the beginning of the year 2023 to date, the index has been stable.
A weak US dollar is good for dollar-denominated commodities because it makes it cheaper for foreign investors to buy them.
The US dollar is gaining momentum regarding the possibility that the Fed will keep US interest rates high for a longer period or may be the impetus for an additional interest rate hike. Meanwhile, all eyes will be on the upcoming Jackson Hole Symposium, where Federal Reserve Chairman Jerome Powell is scheduled to deliver a speech.
Relative to other commodity prices, copper futures were at $3.69 a pound. Platinum futures rose to $912.80 an ounce. Palladium futures rose to $1,248.00 an ounce.
XAU/USD gold price forecast today:
- The general trend of the XAU/USD gold price is still bearish.
- Stability below the $1900 level an ounce still supports bears moving down.
- Prices may move towards stronger support levels, and the closest ones are currently 1875 and 1855 dollars, respectively,
- These are sufficient to push technical indicators towards strong oversold levels, including the best buy gold without risk.
The return of the XAU/USD gold price above the resistance at $1925 an ounce will be important to start the upward shift. I expect a quiet trading session today and the cautious anticipation may remain until the Jackson Hole seminar at the end of the week.
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