- Gold futures hit another record high in the middle of the holiday-shortened trading week.
- Gold prices recorded gains amid a sea of losses in the US Treasury market.
- At the same time, the strength of the US dollar limited the rise in the price of gold. It rose to the resistance of $2,200 per ounce before settling around the level of $2,190 per ounce at the time of writing the analysis and before a round of important British and American economic data results.
According to gold trading platforms, gold prices are on track to achieve a weekly gain of 1%, adding to their 7% increase since the beginning of 2024. Similarly, silver prices, the sibling commodity to gold, are attempting to reclaim the $25 per ounce threshold. However, silver prices are still poised for a weekly loss of about 4%, reducing their increase since the start of 2024 to less than 3%.
In general, Investors are eagerly awaiting key US inflation data. Personal Consumption Expenditure (PCE), the preferred US inflation gauge by the Federal Reserve, is expected to rise by 0.3% monthly. The Core Personal Consumption Expenditure Index, which excludes volatile food and energy components, is expected to increase by 0.4%.
Meanwhile, the financial markets are awaiting whether inflation will ease or accelerate. This has become a crucial part of the data as it may encourage the Federal Reserve to either cut US interest rates at the Federal Open Market Committee (FOMC) meeting in June or delay rate cuts. According to the CME Fed Watch tool, futures markets expect a 70% chance of a US interest rate cut in the June meeting. Lower interest rates typically bode well for gold as they reduce the opportunity cost of holding non-yielding bullion.
Furthermore, the rise in the US Dollar Index (DXY), a measure of the US dollar against a basket of other major currencies, has affected the gold market. It increased by 0.08% to 104.38 from the opening at 104.30. The index is poised to achieve a 1% weekly increase and has risen by over 3% since the beginning of the year so far. Generally, a stronger US dollar is unfavorable for dollar-denominated commodities as it makes their purchase more costly for foreign investors.
In other news, US stock indices on Wall Street rose during yesterday's midweek trading, recovering from losses in the previous two sessions. According to stock trading platforms, the Dow Jones Industrial Average rose 478 points, driven by strong performances from Apple and Intel. The S&P 500 rose by 0.8% to close at a record high, ending a three-day losing streak. Also, the Nasdaq Composite rose by 0.4%, influenced by losses in shares of the AI giant Nvidia. Overall, investors await comments from Federal Reserve officials later in the evening, as well as the release of the Personal Consumption Expenditure inflation report after hours, for insight into the timing of US interest rate cuts. The best-performing sectors in the US market were utilities, real estate, and industrials, while the technology sector's performance was below expectations.
Gold Price Forecast and Analysis Today:
Increasing global geopolitical tensions, coupled with more purchases of gold bullion by global central banks, are still strengths for the gold market, which explains why gold sales have not begun after its recent record gains. Obviously, the weakness of the current strength factors and the recovery of the dollar price after today’s data may give the opportunity to begin selling operations to take profits. Technically, the general upward trend for gold will not be broken without moving towards the support levels of 2120 and 2050 dollars per ounce, respectively.
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