- Gold prices are consolidating around $2320 an ounce today, Wednesday, as investors await fresh cues from a slew of Federal Reserve officials scheduled to speak this week, seeking clearer insights into the potential timeline for US interest rate cuts.
- In this regard, Minneapolis Fed President Neel Kashkari said on Tuesday that due to stalling inflation.
- Obviously, the US central bank may need to keep borrowing costs unchanged for an extended period, possibly through the year, especially considering the strength of the housing market.
Overall, financial markets are now pricing in a 65% chance of a US rate cut in September, according to CME's FedWatch tool. Clearly, lower interest rates make holding non-yielding bullion more attractive. On the other hand, the People's Bank of China increased its gold reserves by 60,000 troy ounces in April, marking the 18th straight month of purchases. Meanwhile, the US said Gaza ceasefire talks must be able to bridge the gaps between Israel and Hamas, while Israeli forces took control of the main border crossing at Rafah yesterday.
According to gold trading platforms, gold prices are up as investors weigh mixed signals on the US economy, with growing optimism that the economy is heading for a soft landing as the Fed battles inflation. Accordingly, the yellow metal rose by as much as 1% on Monday, after its first back-to-back weekly loss since February. Investors are digesting weaker-than-expected US jobs reading that adds to evidence of a gradual slowdown in the economy, easing concerns that markets are heading for a painful path of high inflation and slowing growth.
For his part, Chicago Fed President Austan Goolsbee said on Friday that additional reports like the April report would give him comfort that the economy is not overheating, which could strengthen the case for monetary easing this year. Typically, Higher rates are negative for bullion, which pays no interest.
In trading, gold prices are up about 12% this year despite the elevated inflationary environment and uncertainty over when the US central bank will cut interest rates. The rally saw the metal hit record highs in April, with those gains tied to strong global central bank buying, demand from Asian markets, and safe haven buying amid conflicts in Ukraine and the Middle East.
Overall, bullion has become less attractive in recent weeks amid signs that the Middle East is moving away from a potential all-out war. However, the Israeli military has begun evacuating civilians from Rafah, a possible prelude to a long-awaited assault on the Gaza City. The move comes after ceasefire talks between Hamas and Israel in Cairo over the weekend apparently stalled, with the main sticking point being Hamas' insistence that any truce must be permanent.
Gold Price Forecast and Analysis Today:
Amid the stability of gold prices in narrow ranges since the start of trading this week, we believe that stability will remain with an upward trend, as global geopolitical tensions have returned to the increase. At the same time new signals have come from China to increase gold purchases, which boosts prices. Currently, the closest resistance levels for gold prices are 2340 and 2375 dollars per ounce, respectively. Technically, the last level will strengthen expectations for a move towards the psychological resistance of 2400 dollars again. So far, we still prefer to buy gold from every falling level and from the support of 2280, and at the lower price it is preferable to buy again.
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