- Gold prices settled around $2300 per ounce (XAUUSD) on Tuesday's trading, hovering near their lowest levels in about three weeks as fears of a wider Middle East conflict receded.
- Investors had reduced their investments in safe-haven assets in favor of riskier assets after Tehran downplayed the significance of Israel's retaliatory drone strike against Iran in an effort to ease tensions.
- In addition, continued pressure on gold prices came from hawkish comments from several Federal Reserve officials, who reiterated the possibility of keeping US interest rates high for an extended period to control inflation.
- Higher interest rates tend to reduce the attractiveness of non-yielding assets like gold.
According to economic calendar data, investors are now looking ahead to the release of US personal consumption expenditure (PCE) data for March on Friday, which is the Federal Reserve's preferred inflation gauge, for more clarity on the direction of monetary policy. Investors are also awaiting US first-quarter GDP figures.
Commenting on gold market performance, Richard Gris, Director of Gold, and FX Analysis at ITCM Markets, said that the easing of Middle East tensions "has seen some profit-taking, and there is likely to be some tactical short-selling, given the recent rally in gold prices." Overall, however, the yellow metal is still up about 16% since mid-February, with gains supported by geopolitical risks, central bank buying and Chinese consumer demand. Moreover, the precious metal had risen despite gains in the US dollar and Treasury yields amid signals that the Federal Reserve will delay its much-anticipated pivot.
Currently, traders are turning their attention to US economic data scheduled for release this week, including the Fed's preferred measure of inflation, which may give more clues on the path of monetary policy. Policymakers have turned increasingly hawkish on interest rate expectations in recent weeks after a series of strong inflation reports. As markets continue to ease expectations of monetary easing this year, the price of the metal may have to reckon with the possibility of a higher interest rate environment for a longer period, a scenario that would typically be a headwind for gold since it does not pay interest.
Gold Price Forecast and Analysis Today:
Based on the performance on the daily timeframe chart, the price of gold (XAUUSD) is still in an upward trend despite recent selling pressure. Technically, the first break in the trend will occur if the price of gold moves towards support levels of $2265 and $2155 per ounce respectively. Recently, we still prefer buying gold from all downward levels as geopolitical tensions have eased but not ended, and global central bank purchases of gold remain at record levels. At the same time, many central banks are considering easing their policies. therefore, if the price of gold stabilizes above the resistance level of $2365, bulls may find an opportunity to retest the psychological resistance level of $2400 once again.
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