Gold futures held above the $1800 level to close out the week, driven by easing inflation expectations and the expectation that the Federal Reserve will focus its tightening efforts. But the rise of the US dollar put a cap on the gains of the yellow metal. The price of gold is stable around the support level of $ 1792 an ounce at the time of writing the analysis, and the highest price of gold today was $1802. During last week's trading, XAU/USD gold prices recorded a weekly boost of about 1.2%, reducing its decline since the start of the year 2022 to date to less than 1%. This represents the fourth consecutive weekly gain, and is the longest active streak in about seven months.
Don't let fear prevent profits!
Silver, the sister commodity to gold, rose by $20.50 to end a tumultuous trading week. In general, the price of the white metal also recorded an exceptional weekly increase of 3.3%, reducing its decline in 2022 by about 12%.
All in all, investors are assessing the potential upside for gold now that the dollar has begun to retreat from new highs, yields are falling, and expectations that the US central bank will reverse its tightening campaign. A stronger profit is usually a bad thing for dollar-priced commodities because it makes them more expensive to buy for foreign investors. Moreover, the rising rate environment raises the opportunity cost of holding non-yielding bullion.
The US Dollar Index (DXY), which measures the performance of the US currency against a basket of other major currencies, rose to 105.71, from an opening at 105.09. The index is preparing for a weekly loss of about 0.9%, but is still up about 105% over the year. US Treasury yields were mixed on Friday, with the benchmark 10-year bond yield dropping three basis points to 2.858%. One-year bond yields were flat at 3.255%, while 30-year yields were down 3.1 basis points.
In the United States of America, the spread between the two-year and ten-year bond yields was more than -40 basis points, a widely used recession indicator. But while there is increasing expectation that the Fed will reverse the series of US interest rate hikes, many officials say it is still too early to consider slowing the pace of rate hikes or lowering the Fed funds rate.
Where Tom Barkin, President of the Federal Reserve Bank of Richmond, indicated that the US central bank will likely continue to raise interest rates, but it would be too early to say the size of the increase next month. Minneapolis Fed President Neil Kashkari also noted that July's US Consumer Price Index (CPI) was an indication that the economy is heading in the right direction, but the institution will still need to wait for additional numbers.
For other metals, copper futures fell to $3,662 a pound. Platinum futures fell to $958.00 an ounce. Palladium futures fell to $2,232.50 an ounce.
XAU/USD Technical Analysis
On the daily chart below, it seems clear that the XAU/USD gold price is moving in a neutral situation with an upward bias and the closest to testing the $1800 psychological resistance level again. I mentioned before that the level is important for a stronger move for the bulls to gain more control and bring more technical buying deals, and thus the next strong move is towards the resistance levels of 1818 and 1835 dollars, respectively.
On the downside, a move towards the $1778 and $1760 support levels is a threat to the current bullish outlook and in general I still prefer buying gold from every bearish level.