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Gold prices soared last week, reaching a new all-time high of $2,081 per ounce. However, gold prices erased most of the week’s gains by the end of the week, retreating to $2,015 per ounce. Gold gained strength on Monday, rising to $2,023 per ounce. If gold prices increase, resistance may be encountered near $2,081 per ounce, while if gold prices decline, support may be found near $1,976 per ounce.
The recent crisis in the banking sector caused risk sentiment to plummet, raising the appeal of safe-haven assets. Renewed concerns about a banking sector meltdown provide support for gold prices. Fears of a banking sector meltdown are returning, enhancing gold’s haven status.
Gold prices have been predominantly directed by the dollar’s movement, as the competing gold typically loses appeal as an investment when the dollar rises. Increased risk aversion sentiment combined with the dollar’s decline, boosted gold prices last week. In addition, the Federal Reserve signaled a pause in rate hikes last week, boosting gold prices.
The Federal Reserve raised interest rates by 25 basis points at its monetary policy meeting on Wednesday, bringing the benchmark interest rate to a 16-year high target range of 5.00% to 5.25%. The US Central Bank has signaled that its hawkish policy is coming to an end, providing support for gold prices.
The dollar plummeted last week after the Fed policy meeting, with the dollar index ranging dropping to 101.0. The dollar rallied on Friday and edged higher on Monday, with the dollar index climbing to 101.4. US Treasury yields also gained strength, with the US 10-year bond climbing to 3.51%.
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Written by:
Myrsini Giannouli
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