- At the end of last week's trading, the price of gold XAU/USD jumped to an all-time high. Nearby, it is reaching the resistance level of $2,075 per ounce, with a decline in the US dollar and a decline in Treasury yields.
- In general, financial markets, which are seeing their benchmark indices rise, are responding to the Federal Reserve's decision and expectations of a cut in US interest rates next year.
- According to trading, gold prices recorded weekly gains of 4.3%, adding to their rise since the beginning of 2023 by more than 14%.
In the same performance, silver prices, the sister of gold, traded at the level of $26 per ounce. According to trading, the price of the white metal jumped by 6% last week, raising its performance since the beginning of the year to nearly 7%.
Will the price of gold decrease in the coming days?
After the price of gold (XAU/USD) fell below $1850 per ounce in October, we recommended buying gold at every falling level, and gold prices had seen a tear, with inflation trending lower. As a result, some market analysts believe that the gold price is on track for some decline due to how hot the rally has been over the past month. During Friday's trading, the Relative Strength Index (RSI) was above the 70 level, indicating an overbought climate. Meanwhile, as the annual inflation rate continues to slow, investors are betting that the US central bank will cut interest rates much earlier than expected.
However, Federal Reserve Chairman Jerome Powell said in a speech on Friday that monetary authorities are not even considering cutting US interest rates and that such talks would be “premature.” Furthermore, he added that any reversal in the data would require another interest rate hike. Also, Powell added in a speech at Spelman College in Atlanta, “It would be premature to confidently conclude that we have achieved a sufficiently restrictive stance, or to speculate about when the policy will be eased”. Ending by, “We stand ready to tighten the policy further if it becomes appropriate to do so.”
Recently, gold prices (XAU/USD) found additional support from the decline in Treasury yields and the decline in the dollar price. Simultaneously, bond market yields fell across the board, with the 10-year bond yield falling 13 basis points to 4.22%. similarly, the yield on two-year bonds fell by 15.4 basis points to 4.561%, while the yield on 30-year bonds fell by 10.1 basis points to 4.41%.
Prominently, gold is sensitive to fluctuations in interest rates because it affects the opportunity cost of owning non-yielding bullion.
Another factor affecting the gold market, the US Dollar Index (DXY). This index measures the US currency's performance against a basket of other major currencies, fell to 103.12, from opening at 103.50. Overall, the index recorded a weekly loss of 0.3% and decreased by 0.4% since the beginning of the year to date. The rule, a weaker dollar is beneficial for US dollar-denominated goods because it makes it cheaper for foreign investors to buy them.
As for other metals markets, copper futures rose to $3,899 per pound. Also, Platinum futures rose to $938.10 an ounce. Contrarily, Palladium futures fell to $1,012.00 an ounce.
Gold Price Forecast and Analysis Today:
Based on the performance on the long-term chart, the price of gold XAU/USD has pushed all technical indicators towards strong levels of overbought. Meanwhile, in the case of that the US dollar recovers this week after the announcement of better-than-expected US jobs numbers, the price of gold could be exposed to strong profit-taking sales. Therefore, XAU/USD could not be ruled out with a return to the level of $2,000 per ounce again. However, it is important to consider that the numbers are below all expectations and the continued weakness of the US dollar. So, this situation could not rule out the movement of the price of gold to a new historical record level of $2,100 per ounce.
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