By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all
This week, gold prices have remained stable between $2300 and $2365. On an annual basis, gold prices are up 21% since the end of the second quarter of 2023. Inflation is not decreasing, geopolitical tensions are not reducing, and government deficits are increasing. This provides significant support for gold.
While gold has the potential to fall more in the near term, it is difficult to see how the present trend will change significantly. While the market’s long-term fundamentals remain strong, it still requires a trigger to start a fresh rise to all-time high levels. Investors continue to focus on gold’s opportunity costs as the Federal Reserve pursues an aggressive monetary policy. According to the CME FedWatch Tool, the probability of a 25-basis-point Fed rate drop in September has risen to 69% from 64%.
Gold continues on the defensive as a Head-and-Shoulders chart pattern forms, suggesting bullion may fall. Momentum indicates that neither buyers nor sellers are in control, but the RSI remains negative. If gold falls below $2,300, the next stop would be the May 3 low of $2277, then the March 21 peak of $2222. Sellers are looking for the Head-and-Shoulders chart pattern target of $2170 to $2160, which might result in more losses. Conversely, if Gold reclaims $2,350, it will reveal further critical resistance levels, such as the June 7 cycle high of $2,387, before testing the $2,400 level.
Although markets will be closed on Thursday to celebrate Independence Day in the United States, there will be plenty of data to cause volatility in gold next week.
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