The continued weakness of the US dollar allowed the price of gold XAU/USD to recover yesterday, with gains that exceeded the psychological resistance level of 2,000 USD per ounce. Repeatedly, we had noted the possibility of returning to that peak after the price of gold fell to 1,965 USD per ounce.
At the beginning of this week's trading, the situation was relatively calm on the economic data front, so gold traders watched the latest Treasury auction event and the performance of the dollar. Recently, gold prices XAU/USD have achieved weekly gains of 1.5% and have risen by 8.2% since the beginning of 2023 to date.
At the beginning of trading in the same week, silver prices, the sister commodity to gold, erased some of their gains in recent sessions. Silver futures fell to $23,515 an ounce. Also, the price of the white metal achieved weekly gains of 5% last week and has fallen by approximately 3% so far this year. Meanwhile, the biggest event at the beginning of this week was the $16 billion auction of 20-year Treasury bonds. It enjoyed strong demand, with primary dealers – institutions that acquire bonds when there is little demand from investors – acquiring only 10% of the Treasury bonds issued.
Overall, returns on the broader US Treasury market were mixed, with the 10-year bond yield falling by 2.3 basis points to 4.418%. The two-year bond yield rose 1 basis point to 4.917%, while the 30-year bond yield fell 3.9 basis points to 4.558%. clearly, gold is generally sensitive to fluctuations in interest rates because it can affect the opportunity cost of holding non-yielding bullion.
Furthermore, another factor that provided strong momentum for gold was the decline in the US dollar index (DXY), which is a measure of the US currency against a basket of other major currencies, to the support level of 103.18. According to trading, the index fell by 2% last week, and is now down by 0.1% year to date. now. Thus, a weaker US dollar is beneficial for commodities priced in dollars because it makes it cheaper for foreign investors to buy them.
Gold price forecast for XAU/USD today:
So far, based on the performance on the daily chart below, the price of gold (XAU/USD) remains in an upward trajectory, moving towards the psychological resistance level of $2000 per ounce. Nearby, this signifies strong and positive momentum, indicating bullish control over the trend. Simultaneously, technical indicators may approach levels saturated with buying activity if gold prices move towards the resistance levels of $2015 and $2027 respectively. However, if the price of gold falls below the support level of $1970, it poses a threat to the current bullish trend. Overall, today's gold price will be influenced by the level of the U.S. dollar following the announcement of the minutes from the recent Federal Reserve meeting and the release of U.S. economic data ahead of Thursday's holiday. Moreover, this includes key announcements such as weekly jobless claims, durable goods orders, and the U.S. consumer confidence reading. Additionally, investor risk appetite will be a factor amid ongoing global geopolitical tensions, particularly in the Middle East.
.jpeg "XAU/USD (Daily Chart)")