Gold prices (XAU/USD) underwent a modest recovery after hitting multi-month lows the previous week, briefly surging to its highest point since September 27 at $1,885. However, this upward trajectory was halted as the release of the U.S. inflation data surpassed forecasts, reigniting bullish momentum for U.S. yields and triggering a strong rally in the broader U.S. dollar. These developments led to gold and silver erasing earlier gains and slipping into negative territory.
While the current market conditions pose challenges for precious metals, a ray of hope is beginning to emerge. Recent statements from the Federal Reserve, advocating patience and signaling a potential end to the hiking campaign, suggest a more favorable backdrop for non-yielding assets. Despite the short-term bearish outlook, the tide may turn in favor of gold and silver in the coming months, particularly for the yellow metal, paving the way for a strong advance in the latter part of the year and potentially into 2024.
In terms of technical analysis, gold’s attempted move towards the $1,885 resistance zone on Thursday was swiftly rejected, indicating the continued dominance of sellers. Traders are advised to monitor price action closely for any signs of sustained weakness, which could potentially drive XAU/USD towards $1,860. Conversely, a successful rebound could encounter resistance around $1,885 to $1,890, with further potential resistance at $1,905 and $1,925 respectively, if the bullish momentum persists.