Recent gains have been enough to push all technical indicators towards strong overbought levels.
- Gold futures rose to their highest level ever this week, supported by monetary policy expectations, geopolitical tensions, and global economic outlook.
- According to gold trading platforms, the gold price rose as Bitcoin also rose to a new record high.
- Today, the gold price rose to the resistance level of $2142 per ounce, the highest ever for the gold market.
According to trading, gold prices have erased their losses since the beginning of 2024 and are now up more than 3%. Over the past twelve months, the price of the yellow metal has risen by 16%.
On the other hand, silver prices, the sister commodity of gold, reduced their gains and turned negative. Silver futures fell to $23.92 per ounce. In general, the price of the white metal is close to eliminating its decline in 2024, as it has declined by 0.5% since the beginning of the year until now. Over the past 12 months, silver prices have jumped by 13%. In general, the price of gold closed the Monday session above the resistance of $2,100 per ounce for the first time ever, and it is increasing its gains. On that day, there were two main factors: a weaker US dollar and falling Treasury yields.
According to performance, the US Dollar Index (DXY), a measure of the performance of the US dollar against a basket of other major currencies, fell to 103.80. Overall, the index has risen by 2.45% since the beginning of 2024. As you know, a weaker US dollar is good for dollar-denominated commodities because it makes them cheaper to buy for foreign investors.
US Treasury yields fell across the board, with the 10-year yield down 8.2 basis points to 4.137%. The yield on two-year and 30-year notes fell to 4.552% and 4.276%, respectively. As you know, gold is sensitive to fluctuations in interest rates because it affects the opportunity cost of holding bullion that does not generate a return.
However, there were other contributors to the massive rise in gold prices, including global economic risks, geopolitical strife, and Federal Reserve policy. According to the CME FedWatch tool, the futures market now expects a 65% chance of a rate hike in June, up from 55% a week ago. Obviously, the Investors have backed down on their expectations based on hotter inflation data and strong growth. Meanwhile, financial markets will pay close attention to key economic data, including the February jobs report, and Federal Reserve Chairman Jerome Powell’s testimony before the House and Senate this week.
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The gold price continued its gains, reaching its highest level ever. Recent gains have been enough to push all technical indicators towards strong overbought levels. If the US dollar improves again, there may be opportunities for profit-taking sales of gold.
According to trading, the gold price has added nearly $100 in the past five sessions, supported by a combination of geopolitical tensions, monetary easing expectations, and risks of a decline in stock markets. Also, the magnitude of the recent move has surprised some market watchers, who say it may be partly driven by momentum. The nearest resistance levels for gold are currently $2138 and $2155 per ounce, respectively. In contrast, based on the performance on the daily chart, breaking the current upward trend will depend on returning to the $2000 level.
Generally, while the timing of the US Federal Reserve’s pivot remains uncertain, signs indicating its approach have supported the gold market since mid-February. Recently, swaps markets showed a roughly 60% chance of a rate cut in June, a higher probability than early last month. Moreover, low borrowing costs are usually positive for the yellow metal, which does not offer any interest. At the same time, this uncertainty has led some analysts to question the sustainability of gold’s recent advance.
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