- Gold prices rose above $2328 an ounce today, Tuesday, supported by renewed hopes that the Federal Reserve will start cutting US interest rates this year, after weaker-than-expected job growth in the United States.
- In addition, comments from Fed officials overnight suggesting possible rate cuts later this year are boosting gold prices, especially after the relatively cautious remarks by Fed Chairman Powell last week.
- Gold prices are stable around $2319 an ounce at the time of writing.
According to the platforms of gold trading companies, gold prices shed a weekly loss of 0.6% and rose by 13% since the beginning of the year until now. In the same performance, silver prices, the sister commodity to gold, rose above $27 per ounce to start the trading week. In general, the price of white metal rose by more than 1% last week and has risen by 15% so far this year.
Overall, markets currently show a 64% chance of a US interest rate cut in September, according to the CME's FedWatch tool. A decrease in interest rates increases the attractiveness of holding non-yielding assets. Meanwhile, investors closely monitor developments in the Middle East conflict, where Hamas accepted a ceasefire proposal in Gaza, while Israel continued strikes in Rafah, indicating dissatisfaction with the terms and intending further negotiations.
On the gold market impact front, the US Dollar Index (DXY), a gauge of the US dollar against a basket of other major currencies, turned positive on Monday. Also, the DXY index rose by 0.03% to 105.07 from the opening at 105.03. Overall, the index has risen by 3.7% since the beginning of the year. A strong US dollar is typically unfavorable for dollar-priced commodities as it makes their purchase more costly for foreign investors.
Another factor affecting gold has been the mixed performance of the US Treasury bond market at the start of the trading week, with the yield on 10-year bonds falling by 1.5 basis points to 4.485%. Meanwhile, the yield on 2-year bonds rose by 1.2 basis points to 4.818%, while the yield on 30-year bonds fell by 2.1 basis points to 4.64%. Gold is sensitive to interest rate fluctuations as it can impact the opportunity cost of holding non-yielding assets.
According to stock trading platforms, US stock futures stabilized on Tuesday after major indices started the week positively. In extended trading, Palantir Technologies’ shares fell by over 8% due to weaker-than-expected full-year guidance, while Hims & Hers Health shares jumped by 12% on strong second-quarter revenue guidance. In regular trading on Monday, the Dow Jones rose by 0.46% for the fourth consecutive day. The S&P 500 and Nasdaq Composite indices also rose by 1.03% and 1.19%, respectively, extending their gains for the third day.
In terms of sector trading, ten out of eleven sectors in the S&P 500 ended higher, led by technology, communication services, and the financial sector. These gains were driven by positive sentiment following soft labor data and hopes for imminent rate cuts by the Federal Reserve. New York Fed President John Williams stated that rate cut decisions would depend on incoming data, while Richmond Fed President Thomas Barkin expressed confidence that inflation would fall to 2% as interest rate effects fully materialize.
Gold Price Forecast and Analysis Today:
The increase in global geopolitical tensions again, in addition to the continued pace of strong purchases of gold by central banks, will enhance the gains of the gold price again. Accordingly, there will be a strong opportunity to return to the vicinity of the psychological resistance of $2,400 per ounce if the bulls first return to the resistance levels of $2,345 and $2,370, respectively. On the other hand, according to the performance on the daily chart, breaking the support at $2280 will be important for bears and may move prices towards new buying levels.
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