Despite the ongoing decline of the US dollar, the gold price XAU/USD has faced downward pressure, pushing it towards the support level of $1965 per ounce before stabilizing around $1977 per ounce at the beginning of Tuesday's trading. Therefore, we still anticipate an upward movement in the gold price in the coming period. As the global geopolitical tensions persist, coupled with the continued easing stance of central banks worldwide.
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On another note, global stock market trading was mixed early this week, with Wall Street ending its third consecutive week of gains with slight increases. In stock trading, the German DAX index fell by 0.1% to 15907.92, while the French CAC 40 index rose by 0.3% to 7256.93. also, the UK's FTSE 100 index dropped by 0.3% to 7481.86 points. Finally, the futures of the S&P 500 and Dow Jones Industrial Average also showed little change.
In Asia, the Nikkei 225 index in Japan broke its September peak, reaching its highest level in 33 years before falling to 33388.03, a decrease of 0.6%. Nearby, the Hang Seng index in Hong Kong rose by 1.6% to 17732.36, and the Shanghai Composite index increased by 0.5% to 3068.32. On Monday, China announced that it would keep its key lending interest rates unchanged, as expected, due to the weakness of the yuan and the need to assess the impact of recent stimulus measures on the economy.
In South Korea, the KOSPI index rose by 0.9% to 2491.20. The Australian S&P/ASX 200 index increased by 0.1% to 7058.40. meanwhile, there was no significant change in the Taiwan TAIEX. Moreover, the SET index in Bangkok dropped by 0.1% following the government planning agency's announcement yesterday, revealing that the Thai economy experienced slower growth than anticipated in the fourth quarter. Thus, this was attributed to subdued exports and agriculture, despite robust consumer spending and a rebound in tourism.
By the performance of the US stock indices at the end of last week, the S&P 500 index rose by 0.1% to 4514.02, nearing its highest level in three months. The Dow Jones Industrial Average increased by less than 0.1% to 34947.28 points, and the Nasdaq Composite index rose by 0.1% to 14125.48 points.
Overall, markets hope that US inflation will subside enough for the Federal Reserve to stop raising interest rates, which are affecting the market. Already, The Federal Reserve has raised the key interest rate to the highest level since 2001, attempting to slow down the economy and weaken financial markets enough to control inflation without causing a painful recession. Recently, traders are speculating on when the Federal Reserve will actually start cutting interest rates, which could stimulate investment prices and provide oxygen to the financial system. obviously, The Federal Reserve has stated that it plans to keep interest rates high for some time to ensure the final victory in the battle against inflation, but traders believe that cuts may begin early in the summer of 2024.
In the bond market, another indicator of the gold price, the yield on 10-year Treasury bonds rose to 4.47% early Monday from 4.44% late Friday. Just a few weeks ago, the inflation rate was above 5%, the highest level since 2007, causing a decline in stock prices and other investments. Clearly, the extremely sharp drop in Treasury yields and the very high rise in stock prices could conspire against Wall Street. However, Federal Reserve Chairman Jerome Powell said after the recent meeting of the Federal Reserve on US interest rates that it might not rise further if the summer surge in Treasury yields and the ongoing drop in stock prices "continues." Such pressures could act as alternatives to further interest rate hikes on their own.
Finally, one potential concern is inflation, which has eased in recent weeks. Oil prices fell amid concerns about the mismatch between the abundant supply of crude and the lack of demand.
Gold price forecast for XAU/USD today:
Based on the performance of the daily chart below and despite the halt in gains, the overall trend for the gold price XAU/USD remains upward. Obviously, it is closer to testing the psychological resistance of $2000 per ounce if it moves towards the resistance level of $1985 per ounce again. As mentioned before, the gold price XAU/USD is a buy from every dip, with key support levels for gold currently at $1960, $1948, and $1930 per ounce, respectively. Today, Gold will be affected by the dollar's reaction to the announcement of the content of the minutes of the recent meeting of the Federal Reserve, as well as the increasing geopolitical tensions globally.