- Gold futures prices XAU/USD started the week on an uptrend, stabilizing above the psychological level of $2,000 per ounce.
- Recently, the gains for gold were crowned by the rise in the US dollar and the preparation of traders for the Federal Reserve's monetary policy meeting this week.
- Moreover, analysts say that the focus of the market is not on what the Fed will announce this week, but rather on what it will signal in the coming months.
- The price of gold XAU/USD rose yesterday to the resistance level of $2,037 per ounce and is stable near it at the start of Tuesday's session.
In general, the gold market is coming out of a steady week, but it has fallen by about 2.25% since the beginning of 2024 so far. In the same performance, the prices of silver, the sister commodity to gold, exceeded the level of $23 per ounce. The price of the white metal rose by 3% last week, but it also fell about 3% on an annual basis.
What Will Affect the Gold Market this Week?
There will be two main events this week. First, the Federal Open Market Committee (FOMC) will complete its two-day policy meeting on Wednesday. Widely, it is expected that US interest rates will be maintained at a range between 5.25% and 5.5%. But economists are taking note of what policymakers will signal in the coming months, including whether officials will cut interest rates.
At the December 2023 FOMC meeting and subsequent news conference, the Fed committee voted unanimously to hold US interest rates steady. Also, left the door open for up to five rate cuts in 2024 – a significant amount. Keeping in mind that there are only eight cuts at the Fed. Meetings per year, as Fed Chairman Jerome Powell said in his press conference: “If the economy develops as expected, the average participant expects that the appropriate level for the federal funds rate will be 4.6% at the end of 2024, 3.6% at the end of 2025, 2.6% at the end of 2025 and 9% at the end of 2026, still higher than the expected level, average rate over the long term.”
Secondly, the US jobs report for January will be published on Friday. In this regard, analysts say that the US non-farm payrolls report will show that about 178,000 new job opportunities were created at the beginning of the year.
Until then, gold prices are likely to be driven by the US dollar and the Treasury market. The US Dollar Index (DXY), a measure of the US currency against a basket of other major currencies, rose to 103.63, opening at 103.43. In general, the index rose by 2.3 percent this year and enjoyed the best start to this year in about ten years. As is known, the strength of the dollar is considered negative for dollar-denominated goods because it makes purchasing them more expensive for foreign investors.
Another factor affecting the gold market, the US Treasury market was under downward pressure, with the 10-year bond yield falling 6.5 basis points to 4.095%. Recently, the yield on two-year bonds fell by 4.5 basis points to 4.32%, while the yield on 30-year bonds fell by five basis points to 4.34%. As is known, gold is sensitive to interest rate movements because it affects the opportunity cost of owning non-yielding bullion.
As for other metals markets, copper futures jumped to $3.88 per pound. Also, Platinum futures rose to $937.90 an ounce. Ultimately, Palladium futures rose to $982.50 an ounce.
Gold Price Forecast and Analysis Today:
Increasing geopolitical tensions, despite the strength of the dollar, are likely to support gold prices in the near term. As I mentioned before, a first break in the uptrend will not occur without a move towards the levels of $2,000 and $1,985 per ounce, respectively. Therefore, we still prefer to buy gold from every downside level. On the daily chart, the resistance levels of $2,055 and $2,070 per ounce will continue to support the bulls' control of the trend.
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