At the start of this week’s trading, the price of gold in XAU/USD recovered to the $1930 resistance level before stabilizing around $1921 per ounce at the time of writing.
- Gold futures started the second half of 2023 with modest gains amid steady US dollar prices.
- The yellow metal has been trying to reverse the recent bearish trend of the past two months.
- But with the Fed raising US interest rates two more times this year, can gold prices test $2,000 again?
Forex brokers we recommend in your region
At the start of this week’s trading, the price of gold in XAU/USD recovered to the $1930 resistance level before stabilizing around $1921 per ounce at the time of writing. Overall, the price of gold is relatively stable, showing a monthly loss of around 2%. From the beginning of 2023 to date, the price of gold has increased by approximately 6% as the second half of 2023 approaches.
In the same performance, the price of silver, gold’s sister commodity, topped $23 an ounce ahead of the July 4 holiday. Overall, the price of the white metal enjoyed a weekly gain of 1.45% but a monthly loss of 2%. From the start of 2023 to today, silver prices have fallen by more than 4%. Gold prices have been falling steadily since hitting record highs last spring. After closing above $2,055 on May 4, the yellow metal struggled to maintain any semblance of momentum. Gold faces pressure from rising government bond yields, but also enjoys relief from a struggling dollar.
The 10-year yield rose 2.8 basis points to 3.845%. The yield on the one-month note was unchanged at 5.19%, while the yield on the 30-year note rose 1.2 basis points to 3.866%. The gold market is generally sensitive to interest rate movements as it can affect the opportunity cost of holding unprofitable precious metals.
Another factor affecting gold. The US Dollar Index (DXY) was flat at the start of a short trading week. The index fell 0.01 percent to 102.90 from an opening of 102.91. The DXY dollar index rose 0.2% last week, but fell about 0.6% year-to-date. A weaker exchange rate is usually beneficial for dollar-denominated commodities because it makes it cheaper for foreign investors to buy.
On the economic data front, the US manufacturing recession deepened as the S&P Global Manufacturing Purchasing Managers’ Index and the Institute for Supply Management’s PMI fell to 46.3 and 46, respectively. In other metals markets, copper futures rose to $3.787 a pound. Platinum futures rose to $918.10 an ounce. Palladium futures rose to $1,237.00 an ounce.
According to the performance on the daily chart below, the price of gold is still trending lower and will not find opportunities for a strong rebound unless the content of the minutes of the last session of the US Federal Reserve System come to ease its policy tightening path or if the US jobs numbers came out lower than expected.
As I mentioned earlier, resistance at $1970 an ounce will remain a way for the bulls to regain control of the trend, with the psychological resistance at $2000 an ounce coming back in between. According to recent performance, the support levels at $1908 and $1885 will be the most important targets for more bearish control in the direction of gold.