Gold futures are trying to recover after falling to a three-week low before the announcement of US inflation data this week. Recently, the price of the yellow metal has been struggling to maintain momentum since late last year, although XAU/USD gold prices remain above the $2,000 psychological resistance level. Currently, gold is trying to balance the mixed performance of the US dollar and the Treasury market while also focusing on geopolitics and monetary policy. According to trading, the price of gold, XAU/USD, fell to the support level of $2026 per ounce, which was stable around it at the time of writing the analysis. In general, it has been a difficult start for gold prices so far this year 2024, as they fell by 1.53%.
In the same performance, silver prices, which are the sister commodity to gold, are trying to maintain the level of $23 per ounce. Also, the price of the white metal is struggling to come out of the decline, falling by nearly 3%.
Will gold prices fall in the coming days?
Currently, gold investors are looking for the next catalyst to raise prices. It is possible that the US inflation report for December, scheduled for release tomorrow, is Thursday. The US Consumer Price Index (CPI) is expected to jump to 3.2%, up from 3.1%. However, any slightly higher reading could spark a temporary rally as it could reduce the odds of a US interest rate cut by the Federal Reserve. According to CME FedWatch, the futures market expects a 69% chance of a US interest rate cut at the Federal Open Market Committee (FOMC) policy meeting in March. However, economists expect that interest rate cuts will not occur until the summer.
Meanwhile, the New York Fed's Survey of Consumer Expectations (SCE) shows that inflation expectations for next year have fallen to their lowest level since March 2021 at 3%.
As for other factors affecting gold prices, the Treasury market has had a good start through 2024. On Tuesday, the 10-year bond yield rose above 4%. Furthermore, the yield on two-year bonds reached 4.37%, while the yield on 30-year bonds reached 4.2%. Usually, the gold market is sensitive to fluctuations in interest rates because it affects the opportunity cost of holding non-yielding bullion.
Another factor affecting the gold market, The US dollar had its best start to a year in nearly a decade. Moreover, the US dollar's momentum stopped at the beginning of this week's trading, as the US Dollar Index (DXY) fell by 0.06% to around 102.15. As is known, the weakness of the US dollar is good for dollar-denominated goods because it makes it cheaper for foreign investors to buy them.
As for other metals markets, copper futures rose to $3.835 per pound. On the other hand, Platinum futures were unchanged at $946.70 an ounce. Finally, Palladium futures rose to $1,013.00 per ounce.
Gold Price Forecast and Analysis Today:
According to the daily chart above, the price of gold (XAU/USD) is beginning to break out of the uptrend channel. As we mentioned before, a shift to a downward trend for gold will not happen without a move towards the support levels of $2,000 and $1,985 per ounce, respectively. Consequently, this could happen if US inflation figures come in stronger than expected and support gains for the dollar.
On the same time frame, however, the resistance levels of $2,055 and $2,070 could remain a catalyst for a return to bullish control. Overall, we still prefer to buy gold from every downward level, as global geopolitical tensions and central bank purchases are stimulating the gold market.
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