With pressures on the US dollar, the price of gold is trying to maintain the psychological resistance level of $1900, which paves the way for testing stronger highs. Markets and investors are in cautiously awaiting the release of US inflation figures. The yellow metal has gained momentum over the past month, buoyed by a weak dollar and inflation fears. With expectations that the Federal Reserve will ease its quantitative easing efforts and possibly raise US interest rates, gold prices fell by 0.4% over the past week, but are still up 11% since April. Since the beginning of the year 2021 to date, the price of gold has decreased by 0.3%.
Silver, the sister commodity to gold, also fell below the $28 level. Silver futures fell to $27.905 an ounce. The white metal has also gained significant momentum in recent weeks, gaining 7.3% over the past three months. Since the beginning of the year 2021 to date, silver prices have increased by more than 5%.
It may be a success or failure week for the gold markets this week as traders will pay attention to the US Consumer Price Index (CPI) numbers tomorrow, Thursday. April was already much hotter than expected, and early forecasts suggest the annual inflation rate for May could reach 5%.
After denying its existence, US Treasury Secretary Janet Yellen believes that high inflation may be prevalent as next year approaches. Meanwhile, the Fed insists that inflation remains "temporary" amid the reopening of the US economy.
All in all, market analysts maintain that gold may be holding the pause button for some time because its recovery has been too high and too fast. Despite a double-digit boost in COMEX futures and options, physical demand and exchange-traded fund (ETF) flows slumped this month.
The US bond market was lower, with the 10-year yield slipping 0.035% to 1.535%. One-year bond yields fell 0.003% to 0.48%, while yields on 30-year notes fell 0.034% to 2.218%. Usually, declining bond yields are bullish for the metals market because they lower the opportunity cost and make non-yielding bullion more attractive. Also on the impact on the performance and trading of gold, the US Dollar Index (DXY), which measures the performance of the US currency against a basket of six major competing currencies, jumped to 90.05, from the opening at 89.99. A strong dollar gain is bad for dollar-denominated commodities because it makes them more expensive for foreign investors to buy.
As for other metals, copper futures fell to $4,5095 a pound. Platinum futures fell to $1,160.90 an ounce. Palladium futures fell to $2,805.50 an ounce.
Gold technical analysis:
Stability above the psychological resistance of $1900 will remain important for the bullish trend and give the impetus to move towards stronger highs. I expect profit-taking at any time if the price of gold moves towards the resistance levels of $1919, $1928 and $1945. On the other hand, the bears will not have the opportunity to control the performance without breaching the support of $1855 as a first stage.
Today, in the absence of important economic releases, the price of gold will interact with the price of the dollar and market risk appetite.
