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Gold futures target the $1800 psychological resistance an ounce as weaker US dollar and lower Treasury yields supported the yellow metal on Friday.
- XAU/USD gold prices performed well last week, thanks to expectations that the Fed will slow the pace of rate hikes.
- XAU/USD gold price gains reached the $1773 resistance level for an ounce, the highest for nearly three months.
Gold prices recorded a weekly gain of nearly 5%, reducing its annual loss to less than 4%. In the same way the price of silver, the sister commodity to gold, is struggling for direction. Silver futures fell to $21.685 an ounce. Accordingly, the price of the white metal also recorded a weekly gain of about 4%, reducing its loss in 2022 to about 7%.
The biggest factor on Friday was the decline in the US currency, as it continued to face selling after the US inflation reading for October, which came in less than expected by 7.7%. Accordingly, the US Dollar Index (DXY), which measures the performance of the US currency against a basket of other major currencies, fell to 106.82, from opening at 108.21. Accordingly, the US dollar index suffered a weekly loss of about 3.6%, reducing its huge rise since the beginning of 2022 to less than 12%.
A weak US dollar is a good thing for dollar-denominated commodities as it makes them cheaper to buy for foreign investors.
Other Factors Affecting the Gold Market
The US Treasury market yields were mostly in the red, with the 10-year yield falling 33.1 basis points to 3.811%. One-year yields fell 13.7 basis points to 4.606%, while 30-year yields fell 26 basis points to 4.059%. The low price environment is good for the metals market because it reduces the opportunity cost of holding non-returning bullion.
On the other hand, according to the CME FedWatch tool, investors are betting that the US central bank will raise US interest rates by 50 basis points instead of the previously expected 75 basis points. With inflation showing signs of abating, investors believe the Fed will have enough evidence to ease the tightening cycle. This has allowed the financial markets to record their best performance in a single session since 2020.
Relative to the prices of other metals, copper futures rose to $3.90 a pound. Platinum futures settled at $1,054 an ounce. Palladium futures rose to $2,040.50 an ounce.
XAU/USD Gold Price Forecast Today:
- There is no doubt that the recent trading sessions were enough to push the price of XAU/USD gold in an upward trend that will culminate in testing the psychological resistance level of 1800 dollars.
- This may happen if the price of gold settles above the resistance of 1785 dollars an ounce.
- At the same time, the recent gains were enough to push the technical indicators towards overbought levels according to the performance on the daily chart.
- Unless the price of gold gets momentum, it may be exposed to profit-taking at any time.
On the other hand, and over the same time period, the bears need to return prices towards the support levels of 1735 and 1700 dollars, respectively, to evaporate the hopes of the current upward shift.
Ready to trade today’s Gold prediction? Here’s a list of some of the best XAU/USD brokers to check out.
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