Gold price remained in consolidation mode in the new week. A hawkish Fed and the uncertainties surrounding it continue to impact the precious metals’ market.
Fundamentals
After the Fed interest rate decision made in the past week, investors in the precious metals sector are still digesting the central bank’s hawkish stance and the direction it may take in subsequent meetings. While the Fed paused on its interest rate hikes for the first time in over a year, it hinted at the possibility of at least two more increases by the end of the year.
An environment of high interest rates tends to weigh on gold price by increasing the opportunity cost of holding the non-yielding bullion. In fact, the Fed’s hawkish stance has been on an uptrend for over a month now. As at the time of writing, the benchmark 10-year Treasury yield was at 3.82%; close to the over two-month high hit in late May at 3.85%.
In the ensuing sessions, the precious metal will likely remain range-bound as investors await testimonies and speeches from various FOMC officials. This includes the Fed Chair – Jerome Powell. Even so, gold price may still record subtle movements throughout the week in the absence of major economic data.
Gold price prediction
Gold price remained range-bound into the new week as investors await further cues in the form of FOMC officials testimonies and speeches. Late last week, the precious metal hit a three-month low as the market digests June’s Fed interest rate decision.
A look at its daily chart shows it trading below the 25 and 50-day EMAs, which is a sign that the bears are still in control. In fact, the two MAs have formed a death cross with the 25-day EMA crossing the 50-day one to the downside. This is yet another sign that gold price will remain on a downtrend for a while longer.
In the short term, the range between 1,934.67 and 1,970.19 will be worth watching. Even with further rebounding, the psychologically crucial level of 2,000 may remain evasive for a while longer. More specifically, a move above the aforementioned range will likely place the resistance level at 1,980.05. On the lower side, I expect 1,914.94 to remain a steady support zone for gold price in the short to medium term.
