Gold prices remained range-bound in recent weeks after the bullion’s sharp drop last month, triggered by worries of a wider conflict in the Middle East. Today, held its ground as investors awaited U.S. economic data for insights on potential interest rate cuts by the Federal Reserve. A slight increase in the U.S. dollar limited gains.

Recent gold price action

Gold remained mostly flat at $2,312.61 in today’s trading, while U.S. for June delivery settled 0.1% lower at $2,322.3 per ounce.

The dollar rose by 0.1% amid renewed expectations of rate cuts this year, which could make gold less appealing for foreign currency holders.

“Market is likely to wait for a catalyst for additional upside, whereas the downside does appear to be capped by the limited participation from money managers,” a commodity strategist at TD Securities said.

Boston Federal Reserve President Susan Collins expressed confidence that current monetary policy will slow the economy sufficiently to bring inflation back to the Fed’s 2% target.

Investors are now awaiting the University of Michigan’s consumer sentiment reading on Friday and comments from several Fed officials this week. Also, U.S. consumer price index data will be released on May 15.

Recent weak U.S. jobs data has led money markets to price in two Fed rate cuts this year and around 40 basis points of monetary easing.

Last week, gold prices witnessed the second consecutive weekly decline, settling just above the $2,300 threshold after recent market volatility stemming from the Federal’s midweek policy announcement and the U.S. employment report.

Bullion’s decline surprised traders who had anticipated a stronger rally amid falling U.S. bond yields, especially after Fed Chair Jerome Powell signaled a likely rate cut despite lingering inflation concerns. His dovish stance lifted market optimism, pushing risk assets at the expense of safe-haven investments.

XAU/USD price outlook

Economic uncertainty, potential Fed easing, and a weakening U.S. dollar should theoretically support precious metals, yet gold’s recent rally and disconnection from fundamentals could mean prices remain stagnant or deflate further.

While the U.S. economic calendar appears relatively quiet in the coming week, this may change with the release of the April inflation data on May 15, potentially sparking market volatility. Any surprises could impact sentiment and lead to sharp price shifts.

Following a weak performance last week, gold hit its lowest level in nearly a month but remained above $2,280.

According to a DailyFX analyst, bulls must defend this support to avoid a decline to the key Fibonacci level of $2,260. Further losses could pull XAU/USD prices toward the 50-day simple moving average at $2,235.

On the upside, a bullish turnaround would face initial resistance at $2,325, followed by $2,355. Clearing this territory could open a path toward $2,375 for XAU/USD, marked by a short-term descending trendline from the record high.

• According to recent trading, gold prices have stabilized around $2310 per ounce, failing to break above the $2331 resistance level at the start of the week and resuming a downward trend to around $2308 per ounce at the start of Thursday’s trading, despite renewed geopolitical tensions in the Middle East.
• Recently, gold’s price performance came as investors expected new signals from several Federal Reserve officials scheduled to speak this week, seeking clearer insights into the potential timeline for interest rate cuts.
• In this regard, the head of the Federal Reserve Bank in Minneapolis, Neel Kashkari, said on Tuesday that due to the cessation of inflation, the US central bank may need to keep borrowing costs unchanged for an extended period, perhaps throughout the year, especially in light of the strength of the housing market.

Now, Financial markets show a 65% chance of a US interest rate cut in September, according to CME’s FedWatch tool. Clearly, the lower interest rates make it more attractive to hold non-yielding bullion. On the other hand, the People’s Bank of China increased its gold reserves by 60,000 troy ounces in April, representing the eighteenth consecutive month of purchases. Meanwhile, the United States of America said that negotiations on a ceasefire in Gaza should be able to bridge the gaps between Israel and Hamas, while Israeli forces took control of the main border crossing in Rafah yesterday.

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As for the factors influencing the gold market, The DXY US dollar index rose above 105.5 on Wednesday, reaching its highest level in a week, as hawkish remarks from a Fed official lifted the currency. Minneapolis Fed President Neel Kashkari said on Tuesday that he expects the central bank to stay put for an extended period until there is clear evidence of inflation easing and did not rule out the possibility of a rate hike if inflation accelerates. Concurrently, the investors are looking ahead to more comments from Fed officials and the University of Michigan consumer confidence index on Friday for further clarity on the path of interest rates. On the external front, the US dollar continued to strengthen against the Japanese yen even as Japanese authorities reiterated their warnings against extreme currency moves.

Another factor influencing the price of gold, the yield on US 10-year Treasury bonds rose to 4.5%, from an intraday low of 4.41% touched on Tuesday, as traders monitor the Federal Reserve’s interest rate forecasts. The probability of an interest rate cut in September fell to 65% from 70% earlier in the week.

Comments from several Federal Reserve policymakers this week are also on the radar. On Monday, Richmond Fed President Thomas Barkin said that ending the battle against inflation will likely require hitting demand, and New York Fed President John Williams said that eventually there will be interest rate cuts. Nevertheless, monetary policy is currently in a “very difficult situation.” For his part, the head of the Federal Reserve Bank in Minneapolis, Neel Kashkari, said on Tuesday that it is likely that the US central bank will keep interest rates where they are “for a long period of time.”

Meanwhile, Tuesday’s auction of $58 billion of 3-year Treasuries received good bids. Also, the Treasury will sell ten- and thirty-year bonds this week.

Gold Price Forecast and Analysis Today:

Global central bank activity also played a major role in supporting gold prices, with a net increase in gold purchases recorded during March. According to the World Gold Council, global central banks have added 15 tons of gold to their reserves, while maintaining a steady pattern of purchases. This continued demand from central banks, which are among the largest buyers of gold globally, continues to support the market.

Overall, the combination of softer economic indicators in the United States of America, the continued economic expansion in China, and continued demand from the central bank indicates a potential bull market for gold, as investors and financial institutions reset their strategies in response to global economic trends. Therefore, we still prefer to buy gold from every falling level without risk, and the closest buying levels are currently $2280 and $2235 per ounce, respectively. 

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Despite a bullish US Dollar and hawkish Federal Reserve remarks, Silver (XAG/USD) opened strong at around $27.66, peaking at $27.71. However, the potential for a decline in silver prices persists, influenced by risk-off market sentiment and geopolitical tensions in the Middle East, which typically bolster traditional safe-haven assets like silver. Conversely, the robust US dollar, reinforced by the Federal Reserve’s stance, constrained further gains in silver prices.

Stronger US Dollar and Lower Consumer Sentiment on Silver Prices

The strengthening US dollar, bolstered by expectations that the Federal Reserve will maintain high interest rates, is applying downward pressure on silver prices. Following remarks from Federal Reserve officials like Boston’s Susan Collins, who noted the challenge of reducing inflation to the 2% target, and similar views from New York’s John Williams and Minneapolis’s Neel Kashkari, investor confidence in a near-term rate cut has waned, with the likelihood of a September rate reduction now at just 55%.

The West Texas Intermediate Crude Oil Market reached below the $77 level, but now finds enough buyers to turn things around and perhaps form some type of hammer. We will have to wait and see how the day closes, but I think at this point in time, we are looking at a situation where buyers are licking their chops with the potential opportunity in this market.

That being said, if we were to rally from here and take out the 200 day EMA to the upside, a lot of traders would be very interested in getting involved in momentum trading. Alternatively, if we were to break down below the bottom of the candlestick for the trading session on Wednesday, that means we would probably more likely than not test the $75 level for support. This is an area that I think will be very cautious at this point, and therefore it is likely that we will see a huge fight in this region is we were to reach it.

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Brent looks very much the same as we initially fell rather significantly during the day, but we have seen a fairly large pushback. With this being the case, the 200-day EMA is near the $83.50 level, and I think a major signal if and when we break above there. All things being equal, we are in the middle of a cluster in both grades of crude oil and there should be plenty of support.

• Furthermore, you have to keep in mind that geopolitical issues continue to be a major issue.
• And with that being the case, all it’s going to take is one errant headline coming out of the Middle East, and you will see oil markets rally a dollar almost instantly.
• In general, this is a market that is very noisy, but it does look like it’s in the midst of forming some type of basing pattern after what has been a significant pullback.

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• Gold was rather choppy during the early hours on Wednesday, but we do still have a significant amount of support below that comes into the picture to offer a bit of a potential buying opportunity.
• After all, gold has a lot of things working for it right now as the geopolitical situation continues to be an absolute mess.

Furthermore, we’ve been in an uptrend for a while, so I don’t really see an argument for any type of shorting of the market, even if we were to get a bit of profit taking. We are focusing mainly on the $2,300 level and perhaps even just a little bit below there.

With the 50 day EMA approaching this area, it should only serve to solidify it as important support. If we can break above the $2,350 level, then it opens up a move back to the highs that were just above the $2,400 region. In general, this looks like a bullish flag that is getting ready to kick off and continue the overall uptrend. At this point, it would probably only take some type of random headline out there to really get the market spooked and have gold rallying. Even if we were to break down below here, I think there’s even more support near the $2,200 level. And I do think that gold ends up being one of your better trades this year, albeit probably very noisy.

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Keep in mind that the gold markets can be extraordinarily volatile, and therefore you need to be conscious of your position sizing as there are a lot of different things moving around at the moment. However, I also believe that the gold market is strong for a reason and should continue to be so. Given enough time, it’s very likely that gold not only reaches the high levels that we have seen previously but break above there and go looking into the $2500 level over the longer term. Given enough time, I believe that gold will turn things around in order to continue the previous bullish run.

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Oil prices increased slightly in Asian markets on Thursday after mixed trade data from China and as geopolitical tensions in the Middle East remained high. The possibility of a ceasefire between Israel and Hamas was a focal point, particularly with the U.S. intensifying efforts to mediate.

This context saw Brent oil futures rise to $83.92 and West Texas Intermediate to $79.41 per barrel. However, a decline in China’s oil imports in April, despite stronger overall imports, suggested a potential cooling in the world’s largest crude importer’s demand.

Crude oil prices rose by 0.5 per cent to $78.48 on Monday amid volatility tied to hopes for an end to the Gaza conflict.

Neha Qureshi Mumbai

XAU/USD Current price: $2,316.79

• The US Dollar shed early gains despite a souring market mood.
• Federal Reserve’s officials mixed comments doing little for speculative interest.
• XAU/USD remains technically neutral, with sellers pushing for fresh weekly lows.

Gold price flirts with $2,320 in the American session, trimming early losses that sent XAU/USD to a weekly low at $2,303.60. The US Dollar lost momentum after Wall Street’s opening despite the poor performance of American indexes. The Dow Jones Industrial Average (DJIA) posts some modest gains, although the Nasdaq Composite and the S&P 500 trade in the red.

Financial markets continue to struggle for direction in a week marked by the absence of relevant macroeconomic data. Speculative interest tries to take clues from Federal Reserve (Fed) officials’ words, but so far, none provide fresh clues that could spur some directional price action. Of course, there are always some officials confident enough to deliver a hawkish message, while others stand at the other end of the spectrum.

But in the end, none of them clearly responds to when and by how much the Fed will trim interest rates. At least market players understood it wouldn’t be anytime soon, regardless of the Fed’s dot plot signalling three potential rate cuts through 2024 at the beginning of the year.

XAU/USD short-term technical outlook

The daily chart for XAU/USD shows that the upward potential remains well-limited. The Momentum indicator turned south below its 100 level, while the Relative Strength Index (RSI) indicator consolidates around its midline, reflecting the absence of buying interest. The same chart shows sellers continue to add on approaches to the 23.6% Fibonacci retracement of the April/May rally at $2,326.50. At the same time, the 20 Simple Moving Average (SMA) remains flat at around $2,340, further limiting advances.

The near-term picture is neutral. XAU/USD remains trapped between a mildly bullish 200 SMA and a descendant 100 SMA while stuck to a flat 20 SMA. Finally, technical indicators seesaw around their midlines without clear directional strength. Bears may have better chances on a clear break below the $2,300 mark, although a bearish run will need to wait until the Gold breaks below the 38.2% retracement of the aforementioned rally at $2,260.45.

Support levels: 2,310.40 2,291.20 2,276.50

Resistance levels: 2,326.50 2,340.15 2,356.90 

XAU/USD Current price: $2,316.79

• The US Dollar shed early gains despite a souring market mood.
• Federal Reserve’s officials mixed comments doing little for speculative interest.
• XAU/USD remains technically neutral, with sellers pushing for fresh weekly lows.

Gold price flirts with $2,320 in the American session, trimming early losses that sent XAU/USD to a weekly low at $2,303.60. The US Dollar lost momentum after Wall Street’s opening despite the poor performance of American indexes. The Dow Jones Industrial Average (DJIA) posts some modest gains, although the Nasdaq Composite and the S&P 500 trade in the red.

Financial markets continue to struggle for direction in a week marked by the absence of relevant macroeconomic data. Speculative interest tries to take clues from Federal Reserve (Fed) officials’ words, but so far, none provide fresh clues that could spur some directional price action. Of course, there are always some officials confident enough to deliver a hawkish message, while others stand at the other end of the spectrum.

But in the end, none of them clearly responds to when and by how much the Fed will trim interest rates. At least market players understood it wouldn’t be anytime soon, regardless of the Fed’s dot plot signalling three potential rate cuts through 2024 at the beginning of the year.

XAU/USD short-term technical outlook

The daily chart for XAU/USD shows that the upward potential remains well-limited. The Momentum indicator turned south below its 100 level, while the Relative Strength Index (RSI) indicator consolidates around its midline, reflecting the absence of buying interest. The same chart shows sellers continue to add on approaches to the 23.6% Fibonacci retracement of the April/May rally at $2,326.50. At the same time, the 20 Simple Moving Average (SMA) remains flat at around $2,340, further limiting advances.

The near-term picture is neutral. XAU/USD remains trapped between a mildly bullish 200 SMA and a descendant 100 SMA while stuck to a flat 20 SMA. Finally, technical indicators seesaw around their midlines without clear directional strength. Bears may have better chances on a clear break below the $2,300 mark, although a bearish run will need to wait until the Gold breaks below the 38.2% retracement of the aforementioned rally at $2,260.45.

Support levels: 2,310.40 2,291.20 2,276.50

Resistance levels: 2,326.50 2,340.15 2,356.90 

XAU/USD Current price: $2,316.79

• The US Dollar shed early gains despite a souring market mood.
• Federal Reserve’s officials mixed comments doing little for speculative interest.
• XAU/USD remains technically neutral, with sellers pushing for fresh weekly lows.

Gold price flirts with $2,320 in the American session, trimming early losses that sent XAU/USD to a weekly low at $2,303.60. The US Dollar lost momentum after Wall Street’s opening despite the poor performance of American indexes. The Dow Jones Industrial Average (DJIA) posts some modest gains, although the Nasdaq Composite and the S&P 500 trade in the red.

Financial markets continue to struggle for direction in a week marked by the absence of relevant macroeconomic data. Speculative interest tries to take clues from Federal Reserve (Fed) officials’ words, but so far, none provide fresh clues that could spur some directional price action. Of course, there are always some officials confident enough to deliver a hawkish message, while others stand at the other end of the spectrum.

But in the end, none of them clearly responds to when and by how much the Fed will trim interest rates. At least market players understood it wouldn’t be anytime soon, regardless of the Fed’s dot plot signalling three potential rate cuts through 2024 at the beginning of the year.

XAU/USD short-term technical outlook

The daily chart for XAU/USD shows that the upward potential remains well-limited. The Momentum indicator turned south below its 100 level, while the Relative Strength Index (RSI) indicator consolidates around its midline, reflecting the absence of buying interest. The same chart shows sellers continue to add on approaches to the 23.6% Fibonacci retracement of the April/May rally at $2,326.50. At the same time, the 20 Simple Moving Average (SMA) remains flat at around $2,340, further limiting advances.

The near-term picture is neutral. XAU/USD remains trapped between a mildly bullish 200 SMA and a descendant 100 SMA while stuck to a flat 20 SMA. Finally, technical indicators seesaw around their midlines without clear directional strength. Bears may have better chances on a clear break below the $2,300 mark, although a bearish run will need to wait until the Gold breaks below the 38.2% retracement of the aforementioned rally at $2,260.45.

Support levels: 2,310.40 2,291.20 2,276.50

Resistance levels: 2,326.50 2,340.15 2,356.90 

U.S. Treasury Yields Inch Higher as Rate Outlook Evaluated

U.S. Treasury yields experienced a slight increase on Wednesday as investors deliberated over the latest statements from Federal Reserve officials, seeking insights into the future path of interest rates. At 10:08 GMT, the 10-year Treasury yield rose by over 1 basis point to 4.479%, while the 2-year Treasury yield edged up by just over 1 basis point to 4.839%. Investors closely scrutinized remarks from Fed officials regarding the timing and frequency of potential rate cuts, with recent comments aligning with the Fed’s current stance to maintain steady rates until clearer inflation signals emerge.

Fed Officials Signal Caution Amid Rate Cut Speculation

Minneapolis Fed President Neel Kashkari and Richmond Fed President Tom Barkin indicated a cautious approach towards rate adjustments, emphasizing the need for greater confidence in inflation returning to the 2% target before considering rate cuts. Kashkari also acknowledged the possibility of rate hikes, albeit without ruling out rate cuts entirely. Fed Chair Jerome Powell previously stated the Fed’s reluctance to raise rates at the upcoming meeting, adding to market uncertainty.

Market Speculation on Rate Cuts Amid Economic Data Awaited

Investors anticipate further insights into monetary policy as additional comments from Fed officials are anticipated throughout the week. Concurrently, market attention is directed towards key economic indicators such as weekly initial jobless claims and consumer sentiment data, which could influence future rate decisions.

Stronger Dollar Dampens Silver Appeal

The U.S. dollar strengthened, reversing some losses attributed to renewed expectations of Fed rate cuts, thereby diminishing the appeal of silver for foreign currency holders. The uncertainty surrounding the timing and likelihood of rate cuts contributes to market volatility, influencing silver’s attractiveness as an investment.

Geopolitical Tensions Provide Limited Support

While geopolitical tensions in the Middle East and Ukraine typically bolster silver’s safe-haven status, the impact was mitigated by the prevailing market focus on interest rate dynamics and the dollar’s strength. Political developments, including discussions regarding potential NATO intervention in the UK and escalating conflicts in Gaza, add to market uncertainties.

Short-Term Forecast

Silver prices remained subdued amidst rising Treasury yields and a firmer dollar, counteracting safe-haven demand stemming from geopolitical tensions. Market participants await further clarity on the Fed’s rate outlook and key economic data releases to gauge future silver price movements.