With the beginning of this week’s trading, the performance of gold prices varied despite the weakness of the US dollar and the recent sharp drop in US Treasury yields. The price of gold continued to move in narrow ranges, coinciding with the American holiday, which affected the liquidity of the markets, and the price of the yellow metal moved in narrow terms between the level of 1814 dollars and the level of 1804 dollars for an ounce, and it settled around the level of 1808 dollars an ounce at the time of writing the analysis, waiting for any new developments. The dollar fell but hovered near record levels on fears of slowing global growth.

Eurozone government bond yields rose today, but trading is weak due to the US Independence Day holiday. Yields on the benchmark 10-year US Treasury fell to a one-month low on Friday after weak manufacturing and construction data helped raise expectations that the Federal Reserve may choose a less aggressive pace to raise US interest rates in the coming months.

After a long weekend, the Labor Department’s monthly jobs report is likely to be in the spotlight this week. Investors are also likely to watch reports of factory orders, US trade deficit and service sector activity. Employment in the US is expected to slow in June while the June Fed minutes are almost certain to be hawkish.

Global stock indices rose mostly while US futures fell before the July 4th holiday in the US, so indices rose in London, Paris, Frankfurt and Tokyo but fell in Hong Kong and Seoul. Last week was the fourth losing week in the past five weeks for Wall Street markets as investors fear rising inflation and the possibility that higher interest rates could trigger a recession.

Economic data over the past few weeks has shown that inflation remains high and the economy is slowing. The latter has raised hopes on Wall Street that the Fed will eventually ease its push to raise interest rates, which has been affecting stocks, especially higher-priced sectors such as technology stocks.

Analysts don’t expect a big rally in stocks until there are strong signs that inflation is abating, and recent data has yet to show that. Friday’s report said inflation in countries that use the euro hit another record high, driven by a massive increase in energy costs fueled in part by the Russian war in Ukraine. In general, Wall Street markets remain concerned about the risks of a recession as economic growth slows and the Federal Reserve aggressively raises US interest rates. The Fed is raising interest rates to slow economic growth on purpose to help cool inflation, but it will likely go too far and lead to a recession.

XAU/USD Gold Price Forecast

The gold price stuck to the level of 1800 dollars an ounce, which still gives the bulls the last opportunity to launch higher or continue the selling operations, and therefore the gold price moved in the coming days towards the support levels of 1785 and 1770 dollars, respectively, which are important levels to enable the bears to control the trend and at the same time stimulate gold investors In the return of thinking about buying gold again.

I still prefer buying XAU/USD from every bearish level. The strong bulls will return to the gold market if the prices move towards the resistance levels of 1835 and 1860 dollars, respectively. Technical indicators are in a neutral position with a bearish bias awaiting strong moves in one direction in reaction to the announcement of the minutes of the last meeting of the Federal Reserve and the US jobs numbers.

Amid the recovery of the US dollar, gold prices fell to the level of 1835 dollars an ounce, starting from the resistance level of 1857 dollars an ounce during yesterday’s trading session. The price of gold is stable around the level of $ 1838 an ounce at the time of writing the analysis, waiting for any news. Gold futures fell below an important psychological support level as the yellow metal is on track for another monthly loss. In recent weeks, gold prices have taken a hit on the prospect of higher interest rates, despite inflation at a 40-year high.

Overall, gold prices are poised to drop 0.75% in May, the second consecutive monthly decline. From the start of 2022 to date, the price of gold is still up about 1%. In the same way, silver, the sister commodity to gold, will suffer a sharp monthly decline. As silver futures fell to $21.80 an ounce. The white metal will record a decline of 3.9% in May, adding to its decline since the start of the year 2022 to date by about 7%.

The gold market has faced several headwinds lately, from a strong US dollar to higher interest rates to slowing inflation. Although the US Dollar Index (DXY) will post a massive monthly loss of 1.6%, the index is still up more than 6% this year. The value of the consolidation is bad for dollar-priced commodities because it makes them more expensive to buy for foreign investors.

US Treasury yields rose on the first day after the Memorial Day holiday, with the benchmark 10-year yield rising 11.9 basis points to 2.688%. One-year bond yields jumped 7.1 basis points to 2.061%, while the 30-year bond yield rose 9.6 basis points to 3.072%. Gold is generally sensitive to a higher interest rate environment because it raises the opportunity cost of holding non-yielding bullion.

In other metals markets, copper futures fell to $4.2925 a pound. Copper futures rose to $954.30 an ounce. Futures contracts for palladium fell to 1988 dollars an ounce.

According to the technical analysis of gold: The recent performance of the gold price was normal, after attempts to rebound up and stop the gains. The price of gold did not find enough momentum to continue the rise, and I still prefer to buy gold from every descending level, and the support levels of 1829 and 1815 dollars are the most appropriate to do so. The gold market still has factors that might push it upwards in the future, which are the continuation of the Russian-Ukrainian war and its negative repercussions on the future of global economic recovery.

The resistance levels of 1865 and 1880 are important for the bulls to regain control of the trend. I expect movements in narrow ranges for the gold market until the US jobs numbers are announced.

Gold futures have struggled for direction since this week’s trading began as the Federal Reserve revealed its willingness to raise US interest rates as long as necessary to fight inflation. The yellow metal wiped out all of its gains for 2022 amid a price rally environment. The price of gold tried to recover from the recent selling operations. It pushed it towards the support level of $ 1787 an ounce, its lowest in five months, by rebounding to the level of $ 1836 an ounce. With the lack of momentum, it returned to stability around the level of $ 1811 an ounce at the time of writing the analysis.

Overall, gold prices are down about 1% over the course of 2022, with a loss of 8.5% over the past month.

Silver, the sister commodity to gold, is posting modest gains. Silver futures rose to $21.63 an ounce. In general, the price of the white metal has decreased by 7.3% since the beginning of the year 2022 to date, but it has decreased by more than 23% during the past 12 months.

Despite gold’s losses on Tuesday, market analysts believe that gold may recover soon.

“Gold is on the upside,” Samir Samana, chief global market analyst at Wells Fargo Investment Institute, wrote in a weekly note to clients, adding that support could be found at the 200-day moving average. However, the US central bank reiterated its position that the Fed has room to maneuver to be bolder in raising interest rates. But first it needs evidence that inflation is declining.

Speaking during an event in the Wall Street Journal, Jerome Powell stressed his central bank’s aggressive campaign to fight US inflation, adding that it was possible for the institution to achieve a “soft landing” rather than a recession. “There are a number of reasonable paths to getting a smooth landing,” Powell added yesterday. and “Sometimes it can be a little bumpy. Still a good landing. And what we need to see is inflation coming down in a clear and convincing way and we will keep pushing until we see that.”

He added that the financial markets are operating normally despite the tightening of financial conditions. This may allow the Fed to continue raising US interest rates at a robust pace, but first the Eccles building needs to see “clear and convincing evidence that inflation pressures are easing, and inflation is declining.”

Despite its weakness seen yesterday, the US Dollar Index (DXY) was strong in 2022, rising nearly 8%, which was bearish for gold prices. The US dollar index DXY, which measures the performance of the US currency against a basket of major currencies, fell to 103.35. A lower profit is beneficial for dollar-priced commodities because it makes it cheaper to buy for foreign investors. Another factor affecting the gold market The US Treasury market was mostly in the green, with the benchmark 10-year bond yield rising ten basis points to 2.979%. The one-year bond yield rose 2.1 basis points, while the 30-year bond yield jumped 9.7 basis points to 3.181%.

Gold is sensitive to rising rates because it raises the opportunity cost of holding non-yielding bullion.

The weak US dollar and a slight decline in Treasury yields were seen as the main factors that led to the move to the upside. Accordingly, Lukman Otunuga, senior research analyst at FXTM, said in a note: “Regardless of recent gains, the precious metal is not out of danger yet.”

Better-than-expected economic data also weighed on gold prices: US retail sales rose 0.9%, industrial production jumped 1.1%, industrial production jumped 0.8%, and business inventories increased 2%. In other metals markets, copper futures rose to $4,231 a pound. Platinum futures rose to $941.20 an ounce. Palladium futures rose to $2022.00 an ounce.

According to gold technical analysis: On the daily chart, the price of gold is still around $1800 an ounce. A separating line between the two directions, and the stability above gives the bulls some hope to launch higher again. It supports more buying deals to move towards the resistance levels 1825 and 1855 dollars, which supports the upward trend, then Back to the psychological top 1900 dollars an ounce again.

On the other hand, breaking the support level of $ 1785 an ounce supports the bears to launch in the same last performance, but I still prefer buying gold from every descending level. Despite the desire of global central banks to raise interest rates, which will be negative for gold, we are finding other factors of geopolitical tensions due to the Russian-Ukrainian war and skirmishes from both sides of the Brexit. In addition,  a new outbreak of the pandemic that threatens the second largest economy in the world.