XAU/USD gold prices fell to the support level of $1919 an ounce during yesterday's trading, before prices stabilized around $1935 an ounce at the time of writing. The decline in the price came amid fears of raising US interest rates, as Federal Reserve Chairman Jerome Powell confirmed to the House Financial Services Committee that the central bank is likely to continue raising interest rates to contain inflation. Despite the prospects of higher interest rates, the dollar remained weak, and this helped limit the decline in the price of gold. The US dollar index fell to 102.12, losing more than 0.4%.
For his part, US Central Bank Governor Jerome Powell said in his testimony today: “Almost all participants in the Federal Open Market Committee (FOMC) expect that it will be appropriate to raise interest rates to some extent by the end of the year.” The Fed left interest rates unchanged last week, but the central bank's latest forecast indicates that it plans to resume raising interest rates later this year, and expects a rate of 5.6% by the end of 2023. If the Fed decides to return to its increases, The latter by a quarter point, expectations are that the central bank will raise interest rates two more times this year.
Expectations of additional interest rate hikes come as Powell noted that inflation pressures continue to rise and said the process of returning inflation to the Fed's 2% target "still has a long way to go." Overall, CME Group's FedWatch tool now indicates a 76.9% chance that the Fed will raise rates by another quarter point after its next meeting in late July.
On the global demand front for gold:
Swiss customs data showed Swiss gold exports rose in May after falling to a 10-month low in April due to increased shipments to India. Switzerland is the largest alloy refining and transit center in the world, while China and India are the largest consumer markets. The data showed that Swiss gold exports to India in May were the highest since September 2022.
Consumer demand for the precious metal in Asia is usually sensitive to rising prices. Gold prices have fallen nearly 7% since early May when they reached a near record high of $2,072. The metal touched its lowest since March 13 at $1919.6 an ounce on Wednesday on higher yields and technical selling pressure.
XAU/USD gold price forecast today:
- According to the performance on the daily chart below, the XAU/USD gold price is witnessing a downward shift, despite the weakness of the US dollar.
- Accordingly, gold investors may find opportunities to buy gold again.
- The support levels 1918 and 1885 dollars, respectively, may be the most appropriate to do so without risk.
On the other hand, and over the same period of time, the bulls will not control the direction of gold again without stability above the resistance of 1965 dollars per ounce again.
The gold market will be affected by the level of the US dollar and whether or not investors are willing to take risks, amid increasing global geopolitical tensions.
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