- Gold futures hit another all-time high amid the holiday-shortened trading week.
- The value of gold posted gains amid losses in the U.S. Treasury bond market.
- At the same time, the strength of the US dollar limited the rise in the price of gold, which rose to the resistance of $2,200 per oz before stabilizing around the level of $2,190 per oz at the time of writing and before a series of major UK and US economic data results.
According to gold trading platforms, gold prices are posting a 1% weekly gain, adding to their 7% increase since the start of 2024. Likewise, silver prices, the “sister” of gold commodities, are attempting to reclaim the $25 per ounce mark. However, silver prices are still on pace to suffer a weekly loss of around 4%, reducing their increase since the start of 2024 to less than 3%.
In general, investors are eagerly awaiting key US inflation data. Personal Consumption Spending (PCE), the Federal Reserve’s preferred gauge of U.S. inflation, is forecast to rise 0.3% monthly. The Core Personal Consumption Expenditure Index, which excludes volatile food and energy components, is expected to increase 0.4%.
Meanwhile, financial markets wait to see whether inflation will ease or accelerate. This has become a crucial part of the data as it could encourage the Federal Reserve to cut US interest rates at its June Federal Open Market Committee (FOMC) meeting or delay rate cuts. According to the CME Fed Watch tool, futures markets are predicting a 70% chance of a US interest rate cut at the June meeting. Lower interest rates usually benefit gold as they reduce the opportunity cost of holding unprofitable bullion.
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Additionally, the rise in the US Dollar Index (DXY), a measure of the US dollar against a basket of other major currencies, has affected the gold market. It rose 0.08% to 104.38 from the opening at 104.30. The index is on pace to post a 1% weekly gain and is up more than 3% year-to-date so far. In general, a stronger US dollar is unfavorable for dollar-denominated commodities as it makes their purchase more expensive for foreign investors.
In other news, Wall Street’s US stock indexes rose in mid-week trading yesterday, recovering from losses in the previous two sessions. According to stock trading platforms, the Dow Jones Industrial Average rose 478 points, led by strong performances from Apple and Intel. The S&P 500 rose 0.8% to close at a record high, ending a three-day losing streak. Additionally, the Nasdaq Composite rose 0.4%, affected by losses in shares of artificial intelligence giant Nvidia. Overall, investors await comments from Federal Reserve officials later in the evening, as well as the release of the after-hours Personal Consumer Spending inflation report, to get a sense of the timing of rate cuts. of interest to the United States. The best performing sectors in the US market were utilities, real estate and industrials, while the technology sector performed below expectations.
Rising global geopolitical tensions, coupled with gold bullion purchases by global central banks, are still strong points for the gold market, which explains why gold sales have not begun following recent record gains. Obviously, the weakness of the current strengths and the recovery of the dollar price after today’s data could provide an opportunity to initiate selling operations to take profit. Technically, gold’s overall uptrend will not be broken without moving towards the support levels of $2120 and $2050 per ounce, respectively.
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