At the onset of the abbreviated trading week due to holidays, gold prices maintain their upward trajectory, with a notable surge reaching the resistance level of $2182 per ounce. This level represents the closest point to the psychological barrier of $2200 per ounce, indicating a strong bullish sentiment among investors.
Last week witnessed gold prices edging towards the historical resistance level of $2222 per ounce before encountering profit-taking selling pressure. However, this corrective move did not derail the overall upward trend, underscoring the resilience of gold amidst market fluctuations.
Gold Analysis Today 26/3: Geopolitical Tensions (graph)
According to data from gold trading platforms, gold prices recorded weekly gains of approximately 0.3%, contributing to a year-to-date increase of about 5.1%. Similarly, silver prices surpassed the $25 per ounce mark, demonstrating a steady performance and a 4% increase since the beginning of the year.
Renewed hopes of potential US interest rate cuts have bolstered the metals market, with investors closely monitoring signals from the Federal Reserve. While the Fed opted to maintain the benchmark federal funds rate unchanged last week, the Summary of Economic Projections (SEP) indicated a plan for three rate cuts in the current year. Moreover, the SEP data hinted at a prolonged period of higher interest rates, with fewer rate cuts anticipated in 2025 and 2026.
Factors Affecting Gold Prices
The prospect of lower interest rates supports the continued uptrend in gold prices, given their sensitivity to interest rate fluctuations and their impact on the opportunity cost of holding the non-yielding asset.
Key Economic Indicators and Market Outlook
This week’s economic calendar includes crucial data releases that monetary authorities will scrutinize, notably the US Personal Consumption Expenditures Price Index. Projections anticipate a monthly increase of 0.4% in the index, with the core PCE price index, excluding volatile food and energy components, expected to rise by 0.3%. On an annual basis, both PCE and core PCE are forecasted to remain unchanged.
Furthermore, rising US Treasury yields and the strength of the US dollar index (DXY) above 104.00 have impacted the gold market dynamics. Despite fluctuations, the DXY has appreciated by approximately 3% year-to-date, posing challenges for dollar-denominated commodities.
Conclusion
In conclusion, the gold market remains bullish amidst geopolitical tensions and dovish monetary policy outlooks. While technical indicators suggest potential overbought levels near the historical resistance at $2200 per ounce, geopolitical uncertainties are expected to sustain gold’s momentum. Profit-taking sales may present buying opportunities, but a significant deviation from the overall uptrend would require testing support levels at $2135 and $2070 respectively.
