XAU/USD Gold Price Analysis: Prices May Rebound

Prices may rebound from $1985 support. Focus on geopolitical tensions and central banks' gold buying, with resistance at $2030.

  • Recent strength in the US dollar has pushed gold prices lower, with losses extending to the $1985 support level, the lowest in two months.
  • However, as previously recommended in our live trading recommendations page, we prefer buying gold at each dip level.

(Click on image to enlarge)

Gold Analysis Today - 19/02: Prices May Rebound (Graph)

By the end of the week's trading, gold prices rebounded upwards, reaching gains that exceeded the $2015 resistance level, with trading closing stable around it. On another note, US stock indices fell on Friday, sending Wall Street into a rare week of losses, only the second in the last 16 weeks. According to stock trading platforms, the S&P 500 index dropped by 0.5% from its all-time high set the previous day. The Dow Jones Industrial Average fell by 145.13 points, or 0.4%, and the Nasdaq Composite Index declined by 0.8%. 

Last Friday, a report released on wholesale inflation served as a reminder that the battle against rising prices is far from over. Prices rose in January more than economists expected, following a similar report earlier in the week showing a higher-than-expected increase in the cost of living for American consumers. 

Consequently, Treasury bond yields rose immediately after the report's release, adding pressure on the stock market. Overall, the data kept hopes alive that the Federal Reserve might start cutting interest rates in March, as traders had hoped earlier. It also dampened bets that the Fed's move to ease conditions on the economy and financial markets might not come until May. According to trading, the yield on 10-year Treasury bonds rose to 4.28% from 4.24% late on Thursday. The two-year Treasury bond yield, which closely tracks the Fed's expectations, reached its highest level since December. 

As is known, rising interest rates and yields make borrowing more expensive, hindering economic activity and hurting investment prices. However, recalibrated expectations for interest rate cuts made Wall Street's outlook closer to what the Federal Reserve has outlined. Critics argue that traders' expectations may have exceeded the limit regarding the speed and extent of the Federal Reserve's interest rate cuts in 2024. Wide-ranging expectations persist about the next move by the Federal Reserve to cut its key interest rate, which reached its highest level since 2001, as it is likely to do so. In the meantime, the hope is that the US economy will continue to maintain its strength despite the challenge of rising interest rates. 

last Thursday, a preliminary report indicated that sentiment among American consumers was rising, but not as much as economists had hoped. This is crucial because consumer spending constitutes the largest part of the economy. In a potentially discouraging sign, the report from the University of Michigan also stated that inflation expectations for the next 12 months rose to 3% in February from 2.9% in January. If the economy remains resilient, it will allow companies to achieve profit growth, which could support stock prices. Consequently, the S&P 500 index fell by 24.16 points to 5005.57. Also, the Dow Jones Industrial Average dropped by 145.13 to 38627.99, and the Nasdaq Composite Index decreased by 130.52 to 15775.65. 

 

Gold Price Forecast and Analysis Today: 

Until now, we still prefer to buy gold from every falling level, as global geopolitical tensions, and the increase in central banks’ purchases of gold are factors that support the gold market in the coming period. As we mentioned before, the downward shift in the price of gold will increase if prices move towards the support levels of $2000 and $1985, respectively. Also, the technical indicators will not move towards oversold levels according to the performance on the daily chart without moving towards the support level of $1960 per ounce. On the other hand, over the same time period, the bulls will have the opportunity to control the trend again if the gold price moves towards the resistance levels of 2030 and 2045 dollars, respectively. Therefore, we expect a calm trading session today considering the American holiday, and the most influential on the market this week will be the announcement of the content of the meeting minutes of the latest from the US Federal Reserve. 


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