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Gold prices edged higher on Tuesday, rising to $2,005 per ounce as the US dollar weakened. Gold prices rose close to an all-time high last week, touching $2,048 per ounce, boosted by decreased rate hike expectations. The recent crisis in the banking sector caused risk sentiment to plummet, raising the appeal of safe-haven assets. If gold prices increase, resistance may be encountered near $2,048 per ounce, while if gold prices decline, support may be found near $1,980 per ounce.
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. The dollar weakened on Tuesday, with the dollar index dropping to the 101.7 level. US Treasury also declined, with the US 10-year bond yielding approximately 3.57%.
The Federal Reserve raised interest rates by only 25 basis points at its meeting in March, bringing the benchmark interest rate to a target range of 4.75% to 5.00%. There is a lot of uncertainty and speculation on what the Fed is going to do at its next meeting in May. Market odds are currently in favor of another 25-basis point rate hike rather than a pause in rate hikes. Increases in central banks’ interest rates put pressure on gold prices since assets yielding interest become a more appealing investment compared to gold as interest rates rise.
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Written by:
Myrsini Giannouli
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