XAU/USD gold futures are back above $1,800 an ounce, posting their first weekly gain in four weeks. Overall, the yellow metal came under pressure on the US dollar, which was driven by shifting expectations that the Federal Reserve will continue to raise US interest rates as summer approaches.
Can the yellow metal price maintain this momentum?
According to the performance at the end of last week's trading, XAU/USD gold prices jumped towards the $1856 resistance level, and closed the week's trading stable around it. In general, gold prices recorded weekly gains of more than 2%, which raises the annual increase to more than 1.5%. The lowest price of gold last week was the support level of $1805 an ounce.
In the same performance, silver prices, the sister commodity to gold, topped the $21 resistance barrier, by the end of the week’s trading. Silver futures rose to $21.33 an ounce. In general, the price of the white metal enjoyed a weekly rise of nearly 3%. And year-to-date in 2023, it's still down 12%.
Overall, the precious metal benefited from a weaker dollar as the US Dollar Index (DXY) took a breather. The DXY dollar index, which tracks the greenback's performance against a basket of currencies, fell 0.49% to 104.51, from an opening of 104.94. The index suffered a weekly loss of 0.7%, reducing its gains since the beginning of the year 2023 to date to less than 1%.
A weaker price is beneficial for dollar-denominated commodities because it makes them cheaper for foreign investors to buy.
Treasury yields were also mainly negative on Friday, with the benchmark 10-year yield down more than ten basis points, to 3.969%. One-month yields rose 4.4 basis points to 4.686%, while 30-year yields fell 12.7 basis points to 3.894%.
Gold is generally sensitive to interest rate fluctuations because it can affect the opportunity cost of holding non-yielding bullion. Meanwhile, the price of gold is likely to find support on renewed concerns that excessive Fed tightening could push the US economy into recession.
Commenting on this, Christopher Looney, an analyst at RBC Capital, wrote: “While it is far from its highs in 2022, the dollar is still very strong, but more importantly, interest rates have continued to rise and are close to their highs in 2022 with Treasuries.” America for 10 years, up by 4%.”
All eyes will be on this week's semi-annual congressional appearance by Federal Reserve Chairman Jerome Powell.
In other metals markets, copper futures settled at $4.077 a pound. Platinum futures advanced to $983.50 an ounce. Palladium futures rose to $1451.00 an ounce.
XAU/USD gold price forecast today:
- Last Friday's session was supportive of bulls controlling the XAU/USD gold price, but more stimulus is needed to confirm control.
- This may happen if the currency pair moves towards the $1860 and $1878 resistance levels, respectively.
- Bear in mind that the last resistance level will support the movement of the technical indicators towards overbought areas.
- I expect the gold market to calm down until the markets and investors react to the testimony of US Central Bank Governor Powell and the announcement of US job numbers.
On the downside, XAU/USD gold price may give up a rebound to the upside, if it moves towards the $1825 support again.
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