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Gold Analysis: Gains Eye Fed Minutes

  • A pause in the dollar's advance allowed gold prices to rebound, reaching a high of $2344 an ounce at the time of writing, the highest in two weeks.
  • Its gains have stopped as traders await more US economic data and statements from Federal Reserve officials for clues on the path of US interest rates.
  • Key points of focus include a speech by Federal Reserve Chairman Jerome Powell scheduled for later in the day, along with the release of the minutes of the Federal Open Market Committee (FOMC) meeting on Wednesday and the US non-farm payrolls report on Friday.

Gold Analysis Today 03/07: Gains Eye Fed Minutes (graph)

Meanwhile, yesterday’s data provided some support to bullion prices, as the ISM manufacturing PMI contracted for the third straight month in June, and a measure of the prices paid by US factories for inputs fell to a six-month low, suggesting that inflation may continue to decline. In Europe, European Central Bank President Christine Lagarde said the central bank needed more time to ensure inflation was heading towards 2%, and that interest rate cuts were not urgent.

On the gold market front, the US dollar index held steady around 105.9 on Tuesday after falling to a low of 105.43 in the previous session. It is supported by strong Treasury yields that analyst attributed to increased government borrowing amid a possible second term for Donald Trump. According to trading, the benchmark US 10-year yield held steady at around 4.45%, trading near its highest level in a month. On Monday, the US dollar had come under pressure as a sharp decline in US manufacturing activity supported the case for a rate cut by the Federal Reserve.

According to forex trading, the US dollar recovered some of its losses against the euro, the British pound and the Australian dollar, while it continued to strengthen against the New Zealand dollar, the yuan and the yen. Concurrently, the Japanese currency has fallen to a 38-year low, with carry trades still attractive.

Another factor weighing on the gold market, US 10-year Treasury yields hovering near a one-month high.

According to trading, the yield on the 10-year US Treasury fell to around 4.44% on Tuesday, but remained near its highest level in a month amid last week's debate and Monday's Supreme Court ruling that former presidents enjoy broad immunity from criminal prosecution. Furthermore, the odds of a second term for former President Donald Trump. Obviously, a potential Trump presidency is seen as inflationary due to tax cuts, tighter immigration policies and higher import tariffs. Meanwhile, investors continued to assess Fed policy expectations in light of a weak reading of US personal consumption expenditure inflation for May and a weaker-than-expected ISM manufacturing PMI for June.

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     Gold Price Forecast and Analysis Today:

    As we expected through the free live trading recommendations page, we bought gold from every downward level since it tried to break through the support of $2300 per ounce, and indeed it was a good opportunity for investment. As we mentioned before, the movement of the gold price above the resistance of $2355 per ounce will encourage bulls to move further upwards. Furthermore, the expectations of the psychological resistance of $2400 per ounce will return again if prices move towards the resistance of $2370 per ounce. Again, we still prefer to buy gold from every downward level.

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    Mahmoud Abdallah
    About Mahmoud Abdallah
    Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.

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