- In the middle of trading this week, gold futures retreated as investors digested the latest remarks from Federal Reserve Chairman Jerome Powell.
- The gold price has been bouncing since the exceptional upward wave it witnessed last week.
- The question now is: can gold prices maintain their upward trajectory above the $2,400 per ounce level?
According to gold trading platforms, the gold price fell to $2,355 per ounce, extending its gains this week to the $2,398 per ounce resistance level. Overall, gold prices have risen by 16% since the beginning of 2024 and by nearly 12% over the past 12 months.
In a similar performance, silver prices, gold's sister commodity, are attempting to reclaim the $29 per ounce resistance level in the middle of the week. Overall, the price of the white metal has risen by 19% since the beginning of 2024, supported by an impressive 26% increase over the past three months.
Meanwhile, the investors were not surprised by the US Federal Reserve's warning that recent inflation data may prompt the US central bank to postpone its first interest rate cut. Speaking at a policy forum on economic relations between the United States and Canada on Tuesday, US Federal Reserve Governor Jerome Powell explained that there has been a “lack of further progress” this year on inflation after four consecutive higher-than-expected consumer price index (CPI) readings.
He added, "The latest data shows strong growth and continued strength in the labor market, but also no further progress so far this year towards returning to the 2% inflation target," adding that the current interest rate of 5.25% to 5.5% can be maintained. Also, "It's clear that the latest economic data hasn't given us more confidence, and instead suggests it's likely to take longer than expected to achieve that confidence," he said. "However, we believe policy is well-positioned to deal with the risks we face. We can maintain the current level of restrictions as long as necessary."
With investors expecting a higher restrictive stance for a longer period, US Treasury yields have risen. On Wednesday, the yield on the 10-year bond was steady at around 4.65%. The 2-year bond yield also settled at 4.964%, while the 30-year bond was unchanged at 4.761%.
Obviously, the gold market is typically sensitive to fluctuations in interest rates because it affects the opportunity cost of holding bullion that does not generate a return.
Another factor weighing on the gold market:
The US Dollar Index (DXY), a measure of the US currency against a basket of major currencies, took a breather on Wednesday, falling 0.08% to 106.18, from opening at 106.33. Overall, the US Dollar Index (DXY) has risen by approximately 5% so far this year. A weaker US dollar is usually beneficial for commodities priced in dollars because it makes it cheaper for foreign investors to buy them.
In other metals markets, copper futures rose to $4.3455 a pound. Contrarily, Platinum futures fell to $971.60 an ounce. Persistently, Palladium futures increased to $1,037.00 per ounce.
Gold Price Forecast and Analysis Today:
Despite the recent selling operations, the general trend for the price of gold remains upward. Strength factors are the calming of the tightening policy of global central banks, the increase in global geopolitical tensions, and the increase in purchases by global central banks. The general trend for the price of gold will remain upward and vulnerable to moving towards new record highs. Currently, the closest resistance levels for gold are $2385, $2420, and $2475, respectively. Furthermore, the price of gold today will be affected by the level of the US dollar and the extent of investors’ appetite for risk or not, in addition to the reaction from the statements of a number of US Federal Reserve officials.
Ready to trade today’s Gold forecast? Here are the best Gold brokers to choose from.