Category: Gold News

Gold Analysis Today- 05-03: Heading Towards Record Levels

By Published On: March 5, 20244.2 min readViews: 5660 Comments on Gold Analysis Today- 05-03: Heading Towards Record Levels

Will the price of gold decline in the coming days?

  • Ahead of important events and influential data, gold prices moved towards new record highs as investors continue to bet on the metal.
  • This is considered a safe haven in anticipation of a rate cut by the US Federal Reserve in June.
  • According to gold trading platforms, prices have moved towards the resistance level of $2120 per ounce, just $15 away from the all-time high of $2135 recorded in December 2023. Also, US gold futures traded 1.4% higher at $2128.70 an ounce.

In this regard, Ryan McKay, senior commodity analyst at TD Securities, said: “We still believe that the price may rise as well.” He added to Bloomberg in an interview, “This is because some discretionary macro traders are not sufficiently invested in the metal compared to historical norms heading into the cycle of US interest rate cuts by the Federal Reserve.” For his part, Philip Strebel, chief market analyst at Blue Line Futures in Chicago, said in a note to Reuters that the price of gold could easily rise above record levels.

In general, the rise in gold prices comes amid a growing consensus that the first interest rate cut in the United States of America since early 2020 is around the corner. Moreover, Swap market data shows that nearly three out of five investors are betting that the Federal Reserve will cut US interest rates in June after a series of weaker-than-expected US data reports.

Furthermore, the upcoming US presidential elections and the ongoing wars in Ukraine and Gaza give bullion a long-term boost. Also, analysts at Saxo Bank said: “Rising geopolitical tensions around the world have reduced short selling appetite, essentially strengthening gold’s existing credentials on dips.”

Ultimately, the strong buying activity by investors in exchange-traded gold funds, along with holdings of SPDR Gold shares, has been reflected. Bloomberg data indicated that investors witnessed their first daily inflow in nine trading sessions last Friday.

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According to the American stock markets: The S&P 500 was mostly unchanged, coming off an all-time high this year and the 16th week of gains in the last 18 weeks. Meanwhile, the Dow Jones Industrial Average fell 50 points, or 0.1%, and the Nasdaq Composite Index fell 0.1%. Clearly, the Momentum is slowing for US stocks after rising amid excitement that indicates slowing inflation and the possibility of lowering interest rates, and the US economy has so far ignored expectations of a recession. Meanwhile, the mania around artificial intelligence technology has sent some stocks to massive heights.

Regarding the gold market this week, there are several scheduled events that could unsettle the market. Federal Reserve Chairman Jerome Powell is expected to testify before a House committee on monetary policy tomorrow, Wednesday. Wall Street’s hope was that U.S. inflation would ease enough for the Federal Reserve to be able to lower the U.S. key interest rate from its highest level since 2001. This would alleviate the mounting pressure on the economy and financial markets.

Powell himself has already stated that his next move is likely to be a cut, but he also said that the Federal Reserve needs additional confirmation that inflation is moving decisively toward its 2% target. This was before two recent reports showed that consumer and wholesale inflation were higher than expected.

A report on Friday will show the performance of the labor market in the United States, with economists expecting a slowdown from strong growth in January. Flexibility there has helped keep the U.S. economy away from recession, which in turn would increase corporate profits and support stock prices. However, excessive strength could also lead to continued pressure on inflation. This would force traders to push the first rate cut expectations further out on the calendar. Consequently, the traders have already given up their previous hopes for a cut in March and are now looking to June as the expected start.

According to the performance on the daily chart above, the general upward trend in the price of gold is receiving strong momentum. The recent gains were sufficient to push the technical indicators towards strong levels of saturation with purchase. Therefore, one must be careful not to buy from these peaks. Traders should instead conclude sales deals at limited rates and for different peaks, and not take risks while waiting for profit-taking sales operations that may occur at any time, especially if the gains of the US dollar increase and the central banks continue to maintain a tightening tone. Currently, the closest resistance levels for the gold trend are $2125, $2138, and $2145, respectively. On the other hand, over the same period of time, there will be no reversal of the general trend without a return to the psychological level of $2000 per ounce.

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