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Gold Price Forecast: XAU/USD climbs to new 1-year highs and breaches $2,000 level

  • The price of gold recovers ground on Monday and hits a year high.
  • Risk aversion sentiment and falling US bond yields continue to benefit the yellow metal.
  • The modest strength of the dollar does not prevent the strong positive intraday momentum in the XAU/USD.

The price of gold (XAU/USD) attracts new buying after an initial drop to the $1,968 area on Monday and rises to maximums of more than a year, above the psychological level of $2,000 during the first part of the European session. The strong intraday rise validates Friday’s break of the previous yearly high around the $1,958 area, and supports prospects for a continuation of the recent bullish trajectory seen over the past two weeks or so.

He prevailing risk averse environmentwhich is reflected in a sea of ​​red on global stock markets, turns out to be a key factor that drives safe-haven money flows into gold. Despite recent emergency liquidity measures and multi-billion dollar aid to troubled banks in the US and Europe, concerns about the risk of contagion and the possibility of a global banking crisis in all rules it has not shown signs of remitting. On top of this, looming recessionary risks are weighing on global risk sentiment and forcing investors to take refuge in traditional safe haven assets such as gold.

risk aversion, along with diminishing odds of more aggressive monetary policy tightening by the Federal Reserve, triggered a further sharp decline in US Treasury yields. The US central bank is now expected to soften its hawkish rhetoric to prevent high interest rates from further putting pressure on the economy. Besides, markets expect a minor rise of 25 basis points at the meeting of the Federal Open Market Committee (FOMC) this week, which begins Tuesday, and the Fed will cut rates during the second half of the year. This has been one of the key factors in the recent decline in US Treasury yields.

In fact, the rate-sensitive 2-year US government bond last week posted its biggest three-day drop since Black Monday in October 1987. This, to a large extent, helps offset modest dollar strength. US dollar (USD), which tends to undermine the price of US dollar-denominated gold. Traders, however, may refrain from entering any new bullish positions and prefer to stay out of the risk of key events this week. The Fed is scheduled to announce its policy decision on Wednesday, which will now play a key role in influencing the next directional move for XAU/USD.

Gold technical levels to watch

XAU/USD

Overview
Last price today 2003.81
daily change today 2:35 p.m.
today’s daily variation 0.72
today daily opening 1989.46
Trends
daily SMA20 1856.42
daily SMA50 1879.63
daily SMA100 1824.16
daily SMA200 1776.95
levels
previous daily high 1989.51
previous daily low 1918.31
Previous Weekly High 1989.51
previous weekly low 1867.66
Previous Monthly High 1959.8
Previous monthly minimum 1804.76
Fibonacci daily 38.2 1962.31
Fibonacci 61.8% daily [194551
Daily Pivot Point S1 1942.01
Daily Pivot Point S2 1894.56
Daily Pivot Point S3 1870.81
Daily Pivot Point R1 2013.21
Daily Pivot Point R2 2036.96
Daily Pivot Point R3 2084.41

Source: Fx Street

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