Gold price edged lower on Tuesday as the improvement of the risk appetite further eased the demand for safe havens. A decline in the buying pressure will likely have the precious metal trade below the psychologically crucial zone of $2,000 per ounce for a while longer. As at the time of writing, it was down by 0.29% at $1,951.12.
About a week ago, concerns over the banking crisis boosted gold price to a one-year high at $2,009.63 per ounce. However, in recent sessions, efforts by authorities to bring calmness to the financial markets have curbed the reported gains.
Most recently, First Citizens Bank reached a deal to purchase all the deposits and loans of Silicon Valley Bank. The calmness has yielded some gains in Wall Street while lowering the safe haven demand that has boosted gold price in recent sessions. Dow Jones Industrial Average index extended its previous gains; rising by 0.6% at $32,432.09.
Nonetheless, the weakness of the US dollar has continued to offer some support to gold price. Over a span of three weeks, the greenback has dropped by over 3%. On Tuesday, it remained close to the two-month low hit late last week at $102.00. Granted, the psychological level of $100 has continued to offer steady support to the dollar index since April 2022. As at the time of writing, the index was down by 0.21% at $102.61.
The recent decline is largely due to the ongoing bets that the Federal Reserve has little economic headroom left to keep increasing its interest rates. As is the case with other dollar-priced assets, gold price tends to trade inversely to the value of the US dollar.
Gold price forecast
A look at its daily chart shows gold price still trading above the 25 and 50-day EMAs. Indeed, I expect the bulls to remain in control in the short term.
Granted, the psychological level of 2,000 will remain a resistance level worth watching as the bulls gather enough momentum to break it. Granted, easing of the buying pressure may mean that the precious metal will remain below the aforementioned zone for a while longer.
More specifically, the bulls are keen on defending the current support level of 1,950.93. Below that level, the bears will be seeking to retest the lower support zone of 1,927.35. On the upside, 1990.41 remains a resistance level worth watching.