Although the US dollar fell after the announcement that US interest rates would remain unchanged as expected Gold price XAU/USD it was subjected to selling operations that pushed it to the $1929 support level, the lowest in three months. Gold was stable around it at the time of writing the analysis. Before the Fed’s policy decisions, the price of gold was on the rise, along with the resistance level of $1,972 per ounce.
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- Gold prices rose in the run-up to the Federal Reserve’s latest policy decision as markets expected the U.S. central bank to leave interest rates unchanged following signs of slowing inflation.
- Meanwhile, the U.S. dollar is hovering around multi-week lows, making dollar-denominated gold bullion more attractive to overseas buyers after weak U.S. consumer inflation data boosted bets on a pause in the Fed’s tightening cycle.
Treasury yields also fell after data showed U.S. producer prices posted the smallest annual increase in nearly two and a half years.
Inflation, measured by the Fed’s preferred metric, remains more than double the U.S. central bank’s 2% target. According to CME Group’s FedWatch tool, there is more than a 95% chance of a pause in U.S. interest rate hikes, but almost a 60% chance of a hike at the July meeting.
Indians are likely to sell a record amount of used gold jewelery this year to take advantage of rising domestic prices of the precious metal, according to the World Gold Council. And if domestic prices continue to rise, recycled alloy sales are expected to jump more than 20% to match the previous high of 119.5 tonnes recorded in 2019, the PRA said. Somasundaram, Regional Director General for India at the World Gold Council, in an interview. “India is likely to import less gold this year,” he added from Mumbai.
A reduction in purchases by the world’s second-largest gold importer could put downward pressure on international prices, which are currently hovering around $1,960 an ounce. Gold prices in India have jumped by almost a fifth in the past 12 months, more than twice what they have jumped globally, as a weaker rupee has pushed up the price of the precious metal.
Gold is a popular investment in India, especially in rural areas where banking services can be difficult to access. Farmers often buy and then sell the mineral after a good harvest, and buy seeds, fertilizers and other items when needed. Indian families and temples together own about 25,000 tons of gold. Sales of recycled gold in India, defined as bullion or jewelry sold for cash, jumped by a quarter in the first three months of 2023 from a year earlier to about 35 tonnes, council data showed. Purchases of precious metals decreased by 17% to 112.5 tonnes during the period.
- The price of gold in XAU/USD is witnessing a strong move to the downside.
- It can get close to new buy levels if it moves towards the $1915 and $1895 support levels.
- The bulls will not have strong directional control without a return to near the $1970/oz resistance level again.
The gold market will be influenced by the rest of the monetary policy statements from the central banks of the Eurozone and Japan, and subsequently the reaction to the results of today’s and tomorrow’s US economic data. In general, I still prefer to buy gold from each lower tier.