(MENAFN- Daily Forex)
Gold futures rose at the end of last week, benefiting from a weaker US dollar and lower Treasury yields. According to gold trading platforms, the price of gold has stabilized this month after recording a series of record settlements. The question is: Can gold reignite momentum in the second half of October?
Historically, Gold futures rose to $2675.30 per ounce. Accordingly, gold will be stable this week and remains up about 30% since the beginning of 2024. In the same performance, silver prices, the sister commodity to gold, are looking at $32 per ounce again. Despite this, the price of the white metal suffered a weekly loss of 2.1%, but it is still up 32% since the beginning of the year.
Meanwhile, metal markets advanced on the back of the weakness of the dollar and lower Treasury yields.
The US Dollar Index (DXY), a measure of the dollar against a basket of other major currencies, fell below 103.00. The index recorded a weekly gain of 0.3% and is up 1.5% since the beginning of the year. As is well known, a weaker US dollar is beneficial for dollar-denominated commodities as it makes them cheaper for foreign investors to buy. US Treasury yields were largely in the red, with the 10-year yield falling below 4.08%. The 2-year yield fell 5.8 basis points to 3.941%, while the 30-year yield changed little at 4.385%. As is well known, gold is sensitive to price fluctuations as it affects the opportunity cost of holding non-yielding bullion.
Overall, investors examined the latest US inflation report, which indicates that headline inflation was stable, but core inflationary pressures persisted. According to Economic Calendar, producer prices in September were flat, and wholesale prices fell on an annual basis to 1.8%, higher than expected. The core producer price index unexpectedly jumped to 2.8% on an annual basis and rose 0.2%. Commenting on this, Jim Wyckoff, senior market analyst at Kitco Metals, told CNBC: "The producer price index numbers tended to be friendly to precious metals investors and suggest the Fed is still on track to cut interest rates by a quarter point this year."
Obviously, this comes after the annualized US inflation rate fell to a higher-than-expected 2.4% in September: Will this dissuade the Fed from cutting rates by 50 basis points?
Overall, investors still largely expect the US central bank to cut rates by half a point.
As for stock market indices, the S&P 500 and Dow Jones extended their record highs. According to stock trading platforms, US stocks rose on Friday, buoyed by strong earnings reports from major banks, setting a tone for the third-quarter earnings season. The S&P 500 and Dow Jones both hit new highs, up 0.6% and 1%, respectively, buoyed by strong earnings from JPMorgan (4.4%). Also, Wells Fargo (5.6%). Despite Tesla's 8.8% drop on a disappointing robotaxi event, the tech-heavy Nasdaq managed to close up 0.1%. The positive momentum was supported by economic data, with steady wholesale inflation pointing to progress toward controlling inflation, while Wednesday's hot inflation kept uncertainty over future interest rate cuts by the Federal Reserve. However, investor sentiment remained strong, with weekly gains across all major indices: S&P 500 (+1.5%), Dow Jones (+1.4%), and Nasdaq 100 (+1.7%).
Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money Gold Price Analysis and Forecast Today:
According to gold analysts today, the gold price index remains in a strong and sharp upward trend. As mentioned before, if the factors supporting its gains remain, any decline in the gold price presents buying opportunities. Currently, there is no need to pay attention to technical indicators reaching overbought levels as much as paying attention to the factors supporting its gains, which include increasing global geopolitical tensions and the abandonment of monetary tightening by global central banks. Shortly, the closest resistance levels for gold prices are $2,675 and $2,700 per ounce.
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