Gold futures enjoyed modest weekly gains, despite slowing US inflation gains and Fed optimism. The yellow metal has been struggling in recent months due to the US central bank's aggressive and hawkish campaign. Gold prices could look towards the institution's potential move to ease higher interest rates. The price of gold started this week's trading, rising to the resistance level of 1863 countries for an ounce, after it recorded the support of 1840 dollars an ounce last week.
All in all, the price of gold recorded a weekly increase of about 0.7%, keeping its year-to-date gains intact at around 1.5%. In the same performance, the prices of silver, the sister commodity to gold, rose above the level of $ 22 at the end of trading last week. Accordingly, the price of the white metal also recorded a weekly support by about 2.5%, to reduce its loss since the start of the year 2022 to date to less than 5%.
Gold and silver prices are on the rise after the US central bank's preferred inflation indicator, as the PCE price index rose at a slower pace than in the previous month.
According to official data, in April, the personal consumption expenditures (PCE) price index, the Fed's preferred inflation measure, rose at an annualized pace of 6.3% in April. This is a slight decrease from a rise of 6.6% in March. On a monthly basis, the PCE price index rose 0.2%, down from 0.9% the previous month. The core PCE price index, which strips out the volatile food and energy sectors, rose 4.9% in April, down from a 5.2% increase in March. The monthly core PCE price index was unchanged at 0.3%.”
Overall, this could lead the Fed to stop quantitative tightening after it raised the benchmark US interest rate by 50 basis points at the FOMC meetings in June and July. This will be beneficial for gold as it is sensitive to a higher interest rate environment as it raises the opportunity cost of holding non-yielding bullion.
Also, the price of Bitcoin rose after the US inflation report showed a continuous rise in consumer prices.
Gold prices were still able to take advantage of a weak Treasury market and a weaker dollar. The benchmark 10-year bond yield fell 3.1 basis points to 2.727%. The yield on the one-year bonds decreased by 0.6 basis points, while the yield on the 30-year bonds decreased by 3.6 basis points. The US Dollar Index (DXY), which measures the performance of the US currency against a basket of major currencies, fell 0.11% to 101.72, from an opening at 101.83. Accordingly, the index will record a weekly loss of 1.4%. A low dollar is beneficial for dollar-priced commodities because it makes them cheaper to buy for foreign investors.
In other metals markets, copper futures rose to $4.3005 a pound. Platinum futures rose to $945.60 an ounce. Palladium futures contracts for June were unchanged at $1,955 an ounce.
According to gold technical analysis: So far, the price of gold is still at the beginning of the exit from the last descending channel. The bulls need to move towards the resistance levels of 1885 and 1900 dollars, respectively, to change the general outlook to bullish and continuously. On the other hand, the bearish momentum and the stronger bears control will be in case it moves towards the support levels of 1838 and 1820 dollars for an ounce, respectively. I still prefer buying gold from every bearish level. Gold may remain in a limited environment of performance until the US job numbers are announced, which have a strong reaction to the US dollar and, accordingly, to the gold market.