Gold prices rose in the European market on Friday, continuing to recover for the second day in a row from the lowest level in two weeks. This rise comes in light of the continued movement in the positive zone, supported by the current decline in US dollar levels in the foreign exchange market. This development encourages the benefit of the precious metal, as gold bullion begins trading again above the $2,400 level, which enhances its attractiveness as an investment tool in light of the global currency and economic market changes.
The dollar’s decline comes ahead of the release of personal consumption expenditures data in the United States for March, which is expected to have a major impact on pricing the possibility of a US interest rate cut until next July. These data may be considered an important measure of inflation and are used by monetary policymakers at the Federal Reserve as a preferred benchmark. It will clarify the extent of inflationary effects in the United States and guide future monetary policy for the coming period.
Price outlook: Gold prices today: They recorded an increase of 0.8% to $2,350.20, compared to the opening trading level at $2,332.11, and recorded their lowest levels at $2,326.34.
In the previous trading session, gold prices rose by 0.7%, recording their first gain within the previous four days, thanks to the decline of the US dollar. Recovery continues from the two-week low recorded in the previous session at $2,291.57 per ounce.
U.S. dollar:
On Friday, the dollar index fell by approximately 0.2%, extending its losses for the second session in a row, reaching its lowest level in two weeks. This decline reflects the continued decline in the levels of the US currency against a basket of major and minor currencies.
Analysis: The impact of US economic data on gold prices
American interest:
Following the weak growth data, futures prices for the probability of a 25% cut in US interest rates in June rose from 13% to 15%, and the odds of a cut increased by another 25 points in July, from 44% to 46%.
Personal consumption expenditures:
In order to re-evaluate the contracts referred to above, investors are awaiting later today the release of important data in the United States on personal consumption expenditures during the month of March. The Federal Reserve relies a lot on this data to assess the country’s inflation levels. Weak data below expectations is expected to increase the odds of a US interest rate cut in July at least, which could exacerbate the current losses in US dollar levels.
Expectations about gold performance:
Market analysts said: Gold prices are now fairly stable, as they remain sensitive to expectations related to US interest rate cuts. Last night’s economic data releases presented a bit of a dilemma with growth significantly weak, while inflationary pressures were slow to ease. The significant acceleration in PCE numbers could heighten expectations that we may see just one rate cut from the Federal Reserve this year. If expenditure data comes in lower than market expectations, pricing in the possibility of a US interest rate cut in July will rise.
Accordingly, the US dollar’s losses will worsen, and gold prices will extend their current gains, and may once again trade above $2,400 per ounce, if the data is significantly worse than market expectations.
Gold holdings at the SPDR Gold Trust, the largest global gold-backed index fund, increased yesterday by about 1.15 metric tons, bringing the total to 834.78 metric tons, the highest level since last March 22.
Gold’s Future Amid Geopolitical Tensions & Central Banks
Top of Form
Expected scenario
• The price of gold ended yesterday’s trading above the $2325.90 level, providing signs of an attempt to stop the downward correction and return to resuming the main upward path.
• But it is still below the broken support of the main ascending channel, and faces negative signals provided by technical indicators, which may hinder the price’s mission to rise.
• The conflict between technical factors makes us prefer to stay neutral until we get a clearer signal of the next trend.
• Continuing the rise and breaching the resistance at $2346.50 will return the price to the upward trend, heading towards achieving gains starting at $2390.00 and extending to $2431.45, while breaking the support at $2325.90 represents the key to returning to the downward corrective path, heading towards visiting the $2260.60 level as a main negative target.
Expected trading range: between support $2315.00 and resistance $2355.00.
The most important expectations about gold prices in 2024
• Goldman Sachs Group expects gold prices to rise to $2,700 per ounce by the end of this year, thanks to the unwavering bull market.
• JP Morgan expects the price of gold to reach US$2,500 per ounce by the end of 2024, and said that the precious metal is its primary choice in commodity markets.
• Morgan Stanley expects the price of gold to reach US$2,500 per ounce by the end of 2024, while some analysts at the bank see the possibility of it reaching US$2,700 per ounce in the long term.
Opinions and analysis
• “As long as gold stays above $2,000 an ounce, I remain positive on the metal,” said the precious commodities trader.
• The chief market analyst said that there is enough instability in the Middle East to keep investors interested in gold as part of the safe-haven demand.
Market analysis and opinions
• The market analyst said: “Given recent geopolitical developments that call for tensions to persist for a longer period, the yellow metal is finding some renewed momentum on safe haven flows.
• The chief market strategist said: The slight rise in inflation data will put pressure on the gold market, but the precious metal is well supported at the $2,000 level through central bank purchases.
• The chief market strategist also said: The Federal Reserve is in the driver’s seat for the gold market. We can see a significant rise in prices when it says something about when to reduce interest rates.
• The chief analyst said: Positive flows of ETFs support gold prices, in addition to the Chinese Central Bank, as it was the second largest buyer of gold reserves in the fourth quarter of last year.
• A metals analyst who provides research said: The main drivers for gold are what will happen on the interest rates front.
• Johnny Teves, a strategist at UBS Bank, said: This rise in gold resulted from a decline in real interest rates, in addition to positive investor sentiment towards gold, which put the market in an upward direction.
• Jigar Pandit, head of the commodities department at BNP Paribas, said: We expect central banks to continue buying against the backdrop of geopolitical uncertainty, in addition to the slowdown in China, which will keep global growth under pressure. Therefore, in this uncertain financial environment, gold will remain a safe investment for global central banks.
