Gold prices have been unable to stop the strength of the US dollar, which he recently described as temporary. Gold price XAU/USD fell to the $1688 per ounce level in early trading today, Thursday, after gains early in the week, reaching the $1724 per ounce level. The price of gold is now around the $1690 per ounce level, awaiting any news. Gold tried to hold above the $1700 level and struggled to register any significant momentum. With interest rates rising and the US Dollar strong, the yellow metal failed to make gains that would give it further bullish strength. The question now is, can prices stay within the $1,700 range?
The price of gold has fallen by more than 1% over the past week, which has accentuated its decline since the start of 2022 to date by more than 6.5%. Silver, gold’s sister commodity, has surged since touching $18. However, the price of the white metal is still 2% lower in the past week and around 20% lower in 2022.
More weakness on the horizon?
Market analysts note that the 1.3% decline in the US Dollar Index (DXY), a measure of the US currency against a basket of other major currencies, has kept investors from selling currency. gold. The DXY Dollar Index is currently trading around 106.5, below its high of 109.29. But it’s up 11% since the start of the year. High profit is bad for dollar-priced commodities because it makes them more expensive for foreign investors to buy.
Commenting on the performance of the gold market. “The significant drop in the US Dollar Index this week is limiting seller interest in precious metals,” said Jim Wyckoff, chief analyst at Kitco.com. “However, rising US Treasury yields this week and crude oil market volatility are crushing the bulls.”
The US Treasury market was higher overall, with the yield on benchmark 10-year bonds again above 3%. But market experts are watching the spread between 2-year and 10-year yields, which reversed and faced 20 basis points. The rising rate environment is generally bearish for metals as it increases the opportunity cost of holding non-performing bullion.
Additionally, the Fed’s hawkish decision and the possibility of a 100 basis point rate hike at the Federal Open Market Committee (FOMC) policy meeting next week weighed on the metals market. Meanwhile, with more global central banks embracing a boost, including the European Central Bank (ECB), industry watchers believe it will erode some of the dollar’s bumper gains this year and support oil prices. ‘gold.
Relative to prices of other metals, copper futures hit $3.358 per pound. Platinum futures hit $870.60 an ounce. Palladium futures hit $1,891.00 an ounce.
Stock markets and gold trading
US stocks rose in a volatile session yesterday as investors analyzed the latest corporate news and the potential for geopolitical risks in Europe. The dollar rose, while the euro fell as the Italian government seemed on the verge of collapse. In terms of performance, the S&P 500 index posted its first gain in nearly two weeks, with advances in technology stocks and consumer discretionary stocks offsetting declines in defense, utilities and healthcare. While tech stocks briefly pared their advances after Google announced it would suspend hiring for two weeks, Netflix Inc. is gaining better than its streaming peers’ dreaded spikes, on top of confidence in the resilience of consumers.
In extended trading, shares of Tesla Inc. after the electric car maker reported earnings above Wall Street estimates, reflecting progress in getting production back on track. Alcoa Corp also posted better-than-expected earnings.
Today’s XAU/USD Gold Price Prediction:
The bearish trend of the price of gold XAU/USD is reinforced by abandoning the level of psychological support of 1700 dollars. As mentioned in recent technical analysis, the trend might gain strength on the downside if prices head towards the support levels of $1685 and $1660, respectively, which at the same time is an opportunity to think about buying again from gold.. These levels are enough to push the technical indicators towards oversold levels. In contrast, based on the performance on the daily chart, an initial trend reversal will not occur without the price of gold heading towards the resistance levels of $1755 and $1770, respectively.