- Last Friday, Gold futures recorded their biggest single-session gain since mid-December, driven by concerns over wider-ranging tensions in the Middle East.
- The yellow metal's gains were limited by the strength of the US dollar, which was partially offset by falling Treasury yields.
- Thus, if the conflict escalates, could gold reach $2,100?
Meanwhile, the gold prices XAU/USD rose to the resistance level of $2,062 per ounce on Friday's session before closing the day trading stable around $2,048 per ounce. Despite its gains last week, it will remain down by 1% from the beginning of 2024. In the same performance, silver prices, which is the sister commodity of gold, rose to $23 per ounce. However, the price of the white metal suffered a weekly loss of 0.3%, in addition to its decline since the beginning of the year by 3%.
In general, investors have sought refuge in safe-haven assets as global financial markets monitored the situation in the Red Sea. Moreover, US and British forces launched airstrikes in Yemen in response to a Houthi rebel attack on ships in the Red Sea. Furthermore, while the world is closely watching the conflict in the Middle East, market analysts believe gold may pay more attention to inflation data in the coming weeks to determine what the US Federal Reserve will do next.
Recently, it was announced that the annual inflation rate in the United States of America rose unexpectedly to 3.4% in December. Historically, after that it was 3.1% and higher than market estimates of 3.2%. Core inflation, which excludes volatile food and energy components, was also stubborn, falling just 0.1 percentage point to 3.9%.
Concurrently, the US Dollar Index (DXY), which measures the US currency's performance against a basket of other major currencies, rose to 102.41, from opening at 102.29. Obviously, the index witnessed one of the best starts to the year in nearly a decade. It has increased by 1% since the beginning of the year until now. As is known, the rise in the value of the dollar is bad for goods priced in dollars because it makes it more expensive for foreign investors to buy them.
And another factor affecting gold, US Treasury yields were mostly lower, with the 10-year bond yield falling to 3.95%. Also, the two-year bond yield fell below 4.14%, while the 30-year bond yield rose two basis points to 4.20%.
For other metals markets, copper futures fell to $3.7405 per pound. Moreover, Platinum futures settled at $909.00 an ounce and Palladium futures fell to $980.00 per ounce.
Gold Price Forecast and Analysis Today:
Based on the performance on the daily chart above, the overall trend for the price of gold (XAU/USD) remains upward, and a real shift in the trend will not occur without a return to the support levels of $2000 and $1985 per ounce, respectively. As mentioned before, increasing global geopolitical tensions and central banks' increased purchases of gold alloys will continue to support the current upward trend for gold. Therefore, any decline in gold prices will present buying opportunities. The nearest resistance levels for the current trend are $2060, $2075, and $2100, respectively. Shortly, a decline in the U.S. dollar's price will accelerate the movement towards these peaks.
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