Gold price ended last week at a low level, and remained bearish on Monday, falling through the $1,877 per ounce support and is currently testing the $1,854 per ounce support. If the price of gold decreases, further support may be found at $1,782 per ounce, while resistance may be found at around 1,920 per ounce and higher up at $2,000 per ounce.
The price of gold has been driven by conflicting market forces over the past weeks and balances between increased risk-aversion and rising yields. Gold is supported by increased risk-aversion sentiment arising from the war in Ukraine. Gold price is undermined by increasingly hawkish Fed policy though, which boosts the dollar and real yields.
The rising dollar and US yields have put pressure on the price of gold over the past couple of weeks. Hawkish Fed policy and increased risk-aversion sentiment buoyed the dollar to 20-year highs on Monday. Even though the dollar retreated later in the day, gold prices continued to decline.
US yields have been boosted by a tightening in the Fed’s monetary policy, with the US 10-year treasury note rising above 3.2% on Monday. Real yields compete directly with gold, which is a non-interest-bearing asset, and their rise puts pressure on the price of gold.
Gold’s safe-haven status supports its price, as the ongoing crisis between Russia and Ukraine drives investors away from riskier assets as global economic growth is stalled. Continued Russian hostilities against Ukraine have increased risk-aversion sentiment, providing support for gold. Even though risk-aversion drives investors towards safe-haven assets, the dollar has been surpassing other assets in popularity, decreasing the appeal of gold.
Concerns about the state of the economy in China, after the fresh rise of Covid cases and the lockdown in Shanghai, also boost the price of gold.
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