- At the start of trading this week, gold futures recorded modest gains even after the rise in US Treasury yields and the rise in the US dollar price.
- Generally, the price of the yellow metal is on its way to its seventh consecutive record close.
The question is: can gold prices reach $2200? The price of gold today rose to the resistance level of $2189 per ounce, less than the resistance of $2195 per ounce at the end of last week. The price of gold stabilized around $2181 per ounce at the time of writing the analysis. Overall, gold prices have risen by about 6% since the beginning of 2024.
Concurrently, silver prices, the sister commodity of gold, are looking to the level of $25 per ounce. Moreover, the price of the white metal has risen by about 3% since the beginning of 2024 so far.
According to gold trading companies' platforms, gold prices continued to gain amid expectations that the Federal Reserve will pull the trigger to cut US interest rates later this year. Despite the volatile expectations, the futures market expects the first rate cut at the Federal Open Market Committee (FOMC) policy meeting in June.
Until now the gold market continues to advance amid the strength of the US dollar and increasing Treasury yields. The US Dollar Index (DXY), a measure of the US currency against a basket of other major currencies, rose to 102.86, from opening at 102.71. Recently, the index pared some of its gains this year, rising by only 1.5%. A strong US dollar is usually bad for goods priced in dollars because it makes them more expensive for foreign investors to buy.
Another factor weighing on gold:
US Treasury yields rose mostly across the board, with the 10-year bond yield rising one basis point to 4.1%. Also, the two-year bond yield jumped five basis points to 4.54%, while the 30-year bond yield settled at 4.265%. As is known, the price of gold is sensitive to interest rate movements because it affects the opportunity cost of holding non-yielding bullion.
Meanwhile, investors will also be interested in the US inflation report for February, as consensus estimates point to a reading of 3.1%. The price of gold was little changed after eight consecutive days of gains as traders looked to the release of the US Consumer Price Index on Tuesday for hints about when the US Federal Reserve might start cutting US interest rates.
Spot gold was trading in a narrow range on Monday after rising nearly 5% last week, hitting its highest nominal level in four consecutive days. Last Friday, the gains were supported by US data showing the US unemployment rate at a two-year high, which helped push the US dollar and 10-year Treasury yields lower.
The price of gold rose in March, and this move surprised some investors given that there was no significant change in expectations regarding when the Federal Reserve would begin cutting US interest rates. In testimony before Congress last week, Chairman Jerome Powell stressed that the US central bank needs “more evidence” that inflation is heading towards its 2% target before reducing borrowing costs. Fellow policymakers have made similar statements. A test of gold bulls' optimism will come this week with the release of new US inflation data today. A hotter-than-expected reading - as happened last month - would be a setback to further gains in the precious metal, which does not offer a yield and benefits from a low-price environment.
Gold Price Forecast and Analysis Today:
There is no change in our technical outlook as the overall trend for the price of gold remains bullish. Based on the performance on the daily chart, gold gains have propelled technical indicators towards strong buying saturation levels. Profit-taking sales could occur at any time, especially if the US dollar gains positive momentum from the strength of US inflation figures today. If this happens, support levels at $2155 and $2140 are likely candidates for selling, and there won't be a significant directional shift without moving towards the psychological level of $2000 per ounce. However, if the dollar fails to gain positive momentum, the overall outlook for gold may remain bullish for some time.
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