Gold Technical Analysis: Gold Stable Around the Highest Level in 5 Months

There won't be a first breakdown in gold without moving towards the support level of $1945 per ounce first.

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  • By the end of last week's trading, gold futures prices rose above the psychological resistance level of $2,000 per ounce, affected by fear trading after the escalation of the war in Israel on Friday.
  • At the same time, the yellow metal also benefited from the decline in Treasury yields and the weakness of the US dollar.
  • Recently, gold price gains in XAU/USD extended the $2010 per ounce resistance level, the highest price in five months.
  • According to trading, gold prices recorded weekly gains of 1.2%, bringing their gains since the beginning of 2023 to more than 10%.

Fundamental Factors Supporting the Gold

In the same performance, the prices of silver, the sister commodity to gold, returned to above $23 per ounce again. Despite the rise witnessed late last week, the price of the white metal will record a weekly decline of 1.6%, in addition to its decline since the beginning of the year by 4.2%.

During influential news, according to CNBC, the Israeli army intensified its air attacks on Gaza and its ground forces, which led to an expansion of military activity. Reports that Israel has ramped up its ground offensive on Gaza have provided support for commodities such as gold and crude oil. Therefore, as the weekend approached, investors sought refuge in traditional safe-haven assets, except for the US dollar, which led to a further rise in gold. According to trading, the US Dollar Index (DXY), a measure of the US currency against a basket of other major currencies, fell to 106.53, from opening at 106.60. Therefore, the index will suffer a tepid weekly loss of 0.3%, but it is still up approximately 3% year to date. Therefore, a weaker US dollar is beneficial for dollar-denominated goods because it makes it cheaper for foreign investors to buy them.

Another factor affecting the gold market is that US Treasury bond yields were mixed in performance, with the ten-year bond yield stable at 4.84%. The two-year bond yield fell 2.4 basis points to below 5.02%, while 30-year bond yields rose 3.2 basis points to 5.02%. As is known, gold is sensitive to interest rate fluctuations because it affects the opportunity cost of holding non-yielding bullion.

On the other hand, financial markets mostly ignored the recent inflation data. The PCE price index was unchanged at 3.4%, while the core PCE price index, which removes the volatile energy and food components, fell to 3.7%. Personal spending rose 0.7%, but personal income rose 0.3%. However, the University of Michigan Consumer Confidence Index fell to 63.8, slightly above the consensus estimate of 63. Also, The University of Michigan's one- and five-year inflation expectations rose to 4.2% and 3%, respectively.

As for other metals markets, copper futures rose to $3.6395 per pound. meanwhile, Platinum futures settled at $908.20 an ounce. Finally, Palladium futures fell to $1,129.50 an ounce.

Gold price forecast for XAU/USD today:

According to the performance on the daily chart below, the price of gold will mitigate profits only if global geopolitical tensions calm down, especially from the Middle East region. Conversely, if tensions increase, investors may ignore the technical indicators and move towards stronger upward levels, the closest of which are currently 2020 and 2045 dollars, respectively.

On the other hand, over the same period, there won't be a first break in gold without moving towards the support level of $1945 per ounce first.

The gold market is on an important date this week, as the monetary policy decisions of the banks, the US Federal Reserve, the Japanese Central Bank, and the Bank of England, will be announced, ending with the announcement of US job numbers.

Gold chart

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Mahmoud Abdallah
Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.