Gold traded mostly sideways last week, exhibiting low volatility, with its price depending largely on the dollar’s price. Gold prices dipped to $1,840 per ounce on Monday, as the dollar rallied. If the price of gold decreases, support may be found at $1,786 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 is balanced between conflicting market forces, supported by risk aversion sentiment but pushed down by high dollar and real yields.
Increased risk aversion sentiment due to the war in Ukraine has boosted gold prices over the past few months. As however, the crisis drags on, and risk sentiment is slowly returning to markets, undermining gold price. On Monday, Russia bombed Kyiv for the first time in weeks, raising fears that the crisis is headed towards major escalation. Rising geopolitical tensions worked in favor of safe-haven assets, increasing the dollar’s appeal as an investment. Gold is also considered a safe-haven asset, but the dollar has been outperforming its rivals.
As the dollar and US bond yields rise, competing assets, such as gold, become less appealing as an investment. The dollar rallied on Monday on renewed risk-aversion sentiment, with the dollar index climbing above 102.4. Bond yields also rose, with the US 10-year treasury note yielding above 3.0%. Real yields compete directly with gold, which is a non-interest-bearing asset, and their rise puts pressure on the price of gold.
High inflation rates are also known to support the price of gold, which is often used as an inflation hedge, and with global inflationary pressures increasing, the gold price is boosted. This week, US CPI inflation data are scheduled to be released on June 10th and may affect the gold price.
Stalling global economic growth also gives rise to fears of recession, further supporting the price of gold. Concerns about the state of the economy in China, after the extensive Covid lockdowns in Shanghai and other cities, also boost the gold prices.
The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.
Fill in the registration
form and click
Once you are in the client secure area, please proceed with uploading your Proof of Identity and Proof of Residence.
When your live account is approved, you can deposit funds and start trading on your chosen platform!
The website you are now viewing is operated by TopFX, a trade name of Fondex Limited, an entity which is regulated by the Financial Services Authority (FSA) of Seychelles with a Securities Dealer License No SD037 that is not established in the European Union or regulated by an EU National Competent Authority.
If you wish to proceed, please confirm that your decision will be at your own exclusive initiative and that no solicitation has been made by TopFX or any other entity within the Group.
These cookies fall under the following categories: essential, functional and marketing cookies. Marketing cookies may also include third-party cookies.