Gold clings on to the $1930 support level
The dollars recovery is placing pressure on gold’s movements
Possibilities of raising US interest rates during the upcoming meeting is increasing
Fed officials remain consistent with the phrase - inflation remains higher than the Federal Reserve's target levels
US CPI data will be the key catalyst for the week ahead
Fundamentals affecting gold prices
After showing gains in the latter sessions of the previous week, gold has once again begun to decrease at the outset of this current week. This change in direction can be attributed to the resurgence of the US dollar's strength against both major currencies and commodities.
This shift also follows comments made by a Fed officials, which have raised the probability of upcoming US interest rate hikes before the close of the year.
Michelle Bowman, a Federal Reserve member, has emphasized the necessity for further tightening in interest rates, signaling a willingness to elevate rates in any forthcoming meetings should data indicate progress in curbing inflation. Despite acknowledging the recent decrease in core inflation figures as a positive development, Bowman has noted that inflation still remains higher than the Bank's intended target levels.
Contrastingly, Raphael Bostic, another representative of the Federal Reserve, indicated that additional rate hikes are now unnecessary due to the moderate and favorable performance of the job market. This sentiment was shared by Lael Brainard, another member of the Federal Reserve, who stated that employment data has met expectations.
In the meantime, financial markets are eagerly anticipating the release of several key economic indicators this week, with particular attention on the Consumer Price Index (CPI) in the United States. This release is scheduled for Thursday and is being closely monitored by investors, as it offers valuable insights into potential future shifts in monetary policy.
The precious metal began the week with a slight decline, with prices hovering around $1936 per ounce.
Key technical levels that may impact gold's movements are as follows:
Following a decline, gold underwent a test of the $1930 support level before experiencing a modest rebound, which could potentially lead to the continuation of this level's stability. There's a possibility that it might also undergo a test of the $1946.60 resistance level, and if this level is breached, there's potential for the upward momentum to extend towards $1965, and potentially even reaching as high as $1984.
However, in the event that gold's value drops below the $1930 mark and remains below it, this could contribute to further declines, potentially triggering a test of the $1907 level. Should this level be breached, there's a potential for the downward trend to extend towards $1890.