The price of gold has continued its upward trajectory, experiencing a notable 3% surge over the past week and a remarkable 10% increase since the beginning of 2023. Similarly, silver futures displayed a positive trend, marking a weekly gain of 4%, effectively offsetting its losses for the year.
Amid global unrest, particularly in the Middle East, investors have sought refuge in precious metals, amplifying the demand for gold and silver. Concerns about potential escalation in the conflict, with the possibility of broader regional involvement, have heightened the appeal of safe-haven assets. Furthermore, the prospects of a more restrained approach to US interest rate hikes by the Federal Reserve have added to the positive sentiment in the metal markets.
Despite the Federal Reserve’s acknowledgment of the persistently high inflation and its impact on the economy, the declining US currency has bolstered the attractiveness of dollar-denominated commodities for foreign investors. The slip in US Treasury yields has further supported the bullish sentiment for gold, as interest rate dynamics significantly influence the opportunity cost of holding the non-yielding metal.
In the broader spectrum, other metal commodity prices demonstrated mixed movements, with copper futures witnessing a dip, platinum futures recording a rise, and palladium futures experiencing a decline.
Analyzing the daily chart, gold’s bullish trend remains evident, with the metal testing the key psychological resistance level of $2000 per ounce. While technical indicators signal strong overbought levels, the prevailing geopolitical tensions in the energy-rich Middle East may push gold prices even higher, potentially reaching the next milestones of $2015 and $2025 per ounce.
However, the direction of the US dollar and the global market sentiment could play a pivotal role in shaping gold’s trajectory in the near term. With a relatively quiet economic calendar, market participants are closely monitoring investor sentiment and the overall performance of global markets for any potential impact on gold prices today.