- According to recent trading, gold prices have stabilized around $2310 per ounce, failing to break above the $2331 resistance level at the start of the week and resuming a downward trend to around $2308 per ounce at the start of Thursday's trading, despite renewed geopolitical tensions in the Middle East.
- Recently, gold's price performance came as investors expected new signals from several Federal Reserve officials scheduled to speak this week, seeking clearer insights into the potential timeline for interest rate cuts.
- In this regard, the head of the Federal Reserve Bank in Minneapolis, Neel Kashkari, said on Tuesday that due to the cessation of inflation, the US central bank may need to keep borrowing costs unchanged for an extended period, perhaps throughout the year, especially in light of the strength of the housing market.
Now, Financial markets show a 65% chance of a US interest rate cut in September, according to CME's FedWatch tool. Clearly, the lower interest rates make it more attractive to hold non-yielding bullion. On the other hand, the People's Bank of China increased its gold reserves by 60,000 troy ounces in April, representing the eighteenth consecutive month of purchases. Meanwhile, the United States of America said that negotiations on a ceasefire in Gaza should be able to bridge the gaps between Israel and Hamas, while Israeli forces took control of the main border crossing in Rafah yesterday.
As for the factors influencing the gold market, The DXY US dollar index rose above 105.5 on Wednesday, reaching its highest level in a week, as hawkish remarks from a Fed official lifted the currency. Minneapolis Fed President Neel Kashkari said on Tuesday that he expects the central bank to stay put for an extended period until there is clear evidence of inflation easing and did not rule out the possibility of a rate hike if inflation accelerates. Concurrently, the investors are looking ahead to more comments from Fed officials and the University of Michigan consumer confidence index on Friday for further clarity on the path of interest rates. On the external front, the US dollar continued to strengthen against the Japanese yen even as Japanese authorities reiterated their warnings against extreme currency moves.
Another factor influencing the price of gold, the yield on US 10-year Treasury bonds rose to 4.5%, from an intraday low of 4.41% touched on Tuesday, as traders monitor the Federal Reserve's interest rate forecasts. The probability of an interest rate cut in September fell to 65% from 70% earlier in the week.
Comments from several Federal Reserve policymakers this week are also on the radar. On Monday, Richmond Fed President Thomas Barkin said that ending the battle against inflation will likely require hitting demand, and New York Fed President John Williams said that eventually there will be interest rate cuts. Nevertheless, monetary policy is currently in a “very difficult situation.” For his part, the head of the Federal Reserve Bank in Minneapolis, Neel Kashkari, said on Tuesday that it is likely that the US central bank will keep interest rates where they are “for a long period of time.”
Meanwhile, Tuesday's auction of $58 billion of 3-year Treasuries received good bids. Also, the Treasury will sell ten- and thirty-year bonds this week.
Gold Price Forecast and Analysis Today:
Global central bank activity also played a major role in supporting gold prices, with a net increase in gold purchases recorded during March. According to the World Gold Council, global central banks have added 15 tons of gold to their reserves, while maintaining a steady pattern of purchases. This continued demand from central banks, which are among the largest buyers of gold globally, continues to support the market.
Overall, the combination of softer economic indicators in the United States of America, the continued economic expansion in China, and continued demand from the central bank indicates a potential bull market for gold, as investors and financial institutions reset their strategies in response to global economic trends. Therefore, we still prefer to buy gold from every falling level without risk, and the closest buying levels are currently $2280 and $2235 per ounce, respectively.
Ready to trade today’s Gold forecast? Here are the best Gold brokers to choose from.