Gold price has been gaining ground in Monday’s Asian session, with a 0.50% increase on the day. This uptick in the price of gold is supported by the weaker US Dollar and rising geopolitical tensions in the Middle East. Additionally, speeches from Fed officials Michelle Bowman, Loretta Mester, and Neel Kashkari on Tuesday will be closely watched for further insights into the future monetary policy direction.
The Ministry of Health in Gaza reported at least 35 Palestinians killed and many more injured in Israeli air attacks on a camp in Rafah on Sunday. Gold price has surged over 16% year-to-date, reaching a record high of over $2,400 per ounce in May. US economic data including Durable Goods Orders rising by 0.7% in April and the University of Michigan Consumer Sentiment Index climbing to 69.1 in May, also impact gold prices. Furthermore, UBS analysts have raised their gold price forecast to $2,600 by the end of 2024, while Citigroup predicts gold reaching $3,000 per ounce in the next six to 18 months.
When it comes to technical analysis, the bullish picture for gold remains unchanged on the daily timeframe. Despite the preference remaining positive for gold, there may be a potential for consolidation or further downside, indicated by the 14-day RSI in a bearish zone around 48.5. Key levels to watch include $2,428 and the all-time high of $2,450 as upside barriers, while $2,300 and $2,267 serve as initial and further support levels respectively.
In terms of the US Dollar this week, the currency exhibited weakness against major currencies such as the Australian Dollar. The percentage changes of the USD against listed currencies indicate slight decline against most counterparts. The heat map visually represents these changes for a clearer understanding of the currency movement. Inflation FAQs help explain the concept of inflation and its impact on various financial instruments such as Gold and currencies. When inflation rises, central banks tend to raise interest rates, negatively impacting Gold as an asset due to higher opportunity costs. Lower inflation tends to be positive for Gold as it brings interest rates down, making Gold a more attractive investment option.
In conclusion, gold prices are influenced by a combination of factors such as geopolitical tensions, economic data, and monetary policy outlooks. The current bullish stance in the precious metal continues, with key levels to watch for potential moves. Understanding the impact of inflation on Gold and currencies provides further insights into market dynamics. As investors navigate through these factors, keeping a close eye on developments in global markets will be crucial in making informed investment decisions.
