The return from the American holiday contributed to the movement and activity of the markets. The US dollar returned to rise again, and accordingly, gold’s attempts to correct were exposed to the highest risks, as the price of an ounce of gold fell from the resistance level of 1815 dollars yesterday to the support level of 1790 dollars an ounce and settles around the level of 1803 dollars an ounce at the time of writing the analysis. Markets and investors are cautiously anticipating what will be announced in the minutes of the last meeting of the US Federal Reserve later today. In this meeting, it was pointed out that the date of raising US interest rates is imminent, and accordingly the US dollar has moved in an upward path since the time of the meeting until now.
The return of confirmation of the imminent tightening of the Fed's policy will be supportive of the dollar and negative for the price of gold.
The dollar's strength came as US Federal Reserve (Fed) policy makers brought forward the date they expected US interest rates to rise from 2024 to 2023 at their June policy meeting. Meanwhile, pressure is mounting on the US central bank to determine how it intends to end its quantitative easing ( tapering ) program , a necessary prelude to any rate hike .
The shift in expectations about the future of Fed policy has led to higher yields paid on US government bonds, which in turn increases demand for the dollar. The basis for the Fed's changing stance lies in the strong US economy, which is now printing inflation data well above the Fed's 2.0% target level.
Economists Julius Baer are optimistic about the recent surge in US inflation, saying it remains "harmless". They say inflation in the US has been significantly distorted by the transient effects and is therefore likely to stabilize at low levels, relieving pressure on the Federal Reserve to rush into rate hikes.
“We expect US inflation readings to drop from here and become a bluff in the second half of 2021,” says Julius Baer, economist Julius Baer. Indeed, the temporary nature of higher inflation will allow the Fed to focus on the employment situation, which will take several months to return to pre-pandemic levels.
According to the technical analysis of gold: The bulls stuck to move around and above the psychological resistance of 1800 dollars, which will continue to support the bullish trend and technically increase the purchases to move towards stronger ascending levels. The nearest ones are currently 1816, 1827 and 1842, respectively. Technical indicators still have the opportunity to move higher before reaching strong overbought levels. The return of the gold price to the support levels 1782 and 1765 is a threat to the current bullish outlook for gold.