Gold price has been range-bound for about a week now as the demand for safe havens eases. Besides, Jerome Powell forecasts at least one more interest rate hike in 203; an aspect that has halted talks of a policy pivot. Notably, this has offered support to the US dollar while weighing on the precious metal.
The weakening of the US dollar has been one of the bullish drivers of gold price. This is in addition to the banking crisis-led surge in safe haven demand. Granted, that appears to have eased.
About a week ago, the dollar index dropped to a level last recorded in early February at $101.91. This came amid bets that the Federal Reserve has a limited economic headroom to continue increasing interest rates.
However, the market’s position on the Fed’s action in coming months has been rather neutral in recent sessions. On the one hand, the absence of a hawkish stance by the Fed, coupled with woes over the banking crisis, continue to weigh on the US dollar. This in turn has offered support to gold price.
Even so, ahead of the inflation gauge – PCE price index on Friday, inflation fears favor the greenback at the expense of the precious metals. Jerome Powell forecasts one more interest rate in 2023; news that have eased talks on a probable policy pivot.
Gold price prediction
In a recent article, I forecast that gold price may remain range-bound between 1,950.93 and 1,990.41 in the short term. Indeed, a look at the precious metal’s daily chart confirms this prediction. As at the time of writing, it was up by 0.38% at 1,971.17.
On the one hand, the asset continues to trade above the 25 and 50-day exponential moving averages. This is a sign that the bulls are still in control. Even so, easing of the buying pressure has led to the bulls lacking enough momentum to retest the psychological level of 2,000. Gold price had reached that level over a week ago after a one year hiatus.
In the short term, the aforementioned range will be worth watching. Indeed, I expect 2,000 to remain evasive to the bulls for a while longer. On the lower side, a pullback past the range’s lower border would place the support at 1,927.35.