Gold Analysis Today 29/5: Geopolitical Tensions (Chart)

(MENAFN- Daily Forex)

  • Gold prices dipped on Wednesday from yesterday's highs near $2,365 an ounce. Investors continued to trim bets on federal Reserve rate cuts this year following recent comments from officials and ahead of the key personal consumption expenditures (PCE) inflation report.
  • Yesterday, Minneapolis Fed President Neel Kashkari said in an interview that the Fed should hold off on cutting rates until inflation improves significantly.
  • Thus, it could even raise rates if inflation fails to come down further.

In general, traders are now focusing on personal consumption expenditures data scheduled for release on Friday, the Federal Reserve's preferred measure of US inflation, which is expected to be in line with the Consumer Price Index , indicating that prices are not accelerating.

At the same time, rising geopolitical risks in the Middle East continue to enhance the appeal of a safe haven. Meanwhile, the recent reports showed that the Israeli army denied striking a tent camp west of Rafah, with Gaza health authorities reporting that Israeli tank shelling had killed at least 21 people in a designated civilian evacuation zone.

According to the platforms of licensed currency trading companies, the US dollar index rose above the 104.7 level today, Wednesday. It rebounded more from its recent lowest levels amid hawkish signals from the Federal Reserve, while investors prepared for the US personal consumption expenditures price report scheduled for later this week. Furthermore, the Fed should hold off on cutting interest rates until significant progress is made on inflation, Minneapolis Fed President Kashkari told CNBC on Tuesday. Also, he stated that the US central bank may consider raising interest rates if inflation does not continue to decline.

Meanwhile, data on Tuesday showed that US consumer confidence unexpectedly improved in May, reinforcing hawkish expectations on Federal Reserve policy. Now, markets see December as the likely start of the monetary easing cycle, well after previous expectations of a September rate cut.

According to trading, the price of the US dollar strengthened in all areas. Nevertheless, failed to gain much momentum against the Australian dollar, with the monthly inflation rate in Australia accelerating to its highest level in five months.

Another factor affecting the gold market , the yield on 10-year US Treasury bonds rose by about 10 basis points to reach 4.54% after the bad results of the 5-year and 2-year auctions led to sales. Moreover, the United States sold five-year bonds worth $70 billion at an interest rate of 4.553%, slightly above the pre-auction level of 4.540%. An earlier offering of $69 billion in two-year bonds also saw tepid demand. Likewise, bond markets were already under pressure earlier in the session after data showed US consumer confidence rose unexpectedly in May, dampening expectations for an interest rate cut.

Also, investors digested comments from Minneapolis Fed President Neel Kashkari, who indicated that the current policy stance is restrained but stressed that officials have not completely ruled out additional interest rate hikes.

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Gold Price Forecast and Analysis Today:

The price of gold may remain supported if global geopolitical tensions continue to increase along with more central bank purchases of gold. Therefore, the chances of a rise are still stronger, and the bulls' control over the trend will increase if the gold price moves towards the resistance levels of 2372 and 2385, then the psychological resistance of $2400 per ounce again. On the other hand, according to the performance on the daily chart with the $2,300 support level broken, there may be opportunities to think about starting to buy gold again.

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