At the start of the short trading week due to holidays, gold prices are still on their strong upward trend, gaining at the start of the week to reach the resistance level of $2182 per ounce. This is closest point to the psychological resistance level of $2200 per ounce. Last week, gold prices moved towards the historical resistance level of $2222 per ounce before being later exposed to profit-taking selling, but this did not take it out of the general upward trend.
Gold Analysis Today 26/3: Geopolitical Tensions (graph)
According to gold trading platforms, gold prices recorded weekly gains of about 0.3%, adding to their annual increase since the beginning of 2024 by about 5.1%. In the same performance, silver prices, the sister commodity of gold, exceeded the $25 per ounce level again. The white metal price was stable last week but is still up 4% so far this year.
Federal Reserve’s Interest Rate Outlook
The metals market is witnessing renewed optimism surrounding potential US interest rate cuts. While the Federal Reserve maintained the benchmark rate, indications from the Summary of Economic Projections (SEP) suggest a plan for three rate cuts this year, with fewer expected in 2025 and 2026. This dovish stance supports gold prices, given their sensitivity to interest rate fluctuations.
Economic Calendar Insights
This week’s economic calendar highlights crucial data, notably the US Personal Consumption Expenditures Price Index. Projections anticipate a 0.4% monthly increase in the index, with the core PCE price index expected to rise by 0.3%. These figures, if realized, could influence market sentiment and gold prices.
US Treasury Yields and Dollar Strength
US Treasury yields experienced an uptick, with notable increases across different tenors. Concurrently, the US dollar index (DXY) surpassed 104.00, exerting pressure on dollar-denominated commodities like gold. Despite fluctuations, the DXY has appreciated by approximately 3% year-to-date, dampening gold’s appeal to foreign investors.
Other Commodity Markets
In parallel markets, copper futures climbed to $4.0315 per pound, while platinum and palladium futures rose to $913.60 and $1027.00 per ounce, respectively.
Gold Price Forecast
Considering the technical landscape, the bullish trend for gold remains unchanged. However, a move towards the historic resistance at $2200 may lead to overbought conditions. Geopolitical tensions will likely sustain gold’s momentum, offering buying opportunities amid potential profit-taking sales. A significant deviation from the uptrend would entail testing support levels at $2135 and $2070.
Conclusion
In conclusion, gold prices exhibit resilience amidst geopolitical uncertainties and dovish monetary policy outlooks. While the US dollar’s strength and Treasury yields pose challenges, geopolitical tensions and interest rate dynamics remain pivotal in shaping gold’s trajectory. Vigilance towards economic data and global developments is crucial for investors navigating the ever-evolving gold market landscape.
