Bulls Stand Firm as Gold Price Holds Near Two-Month High

Gold prices have stabilized near a two-month high, showing resilience despite recent fluctuations. After a strong surge last week, the market has paused, with traders cautious amidst upcoming US economic data and events. The slightly overbought Relative Strength Index (RSI) on the daily chart is seen as a minor obstacle for further gains.

Factors supporting the gold market include disappointing US macro data and less hawkish comments from Federal Reserve officials, which have weakened the US Dollar. Additionally, optimism surrounding Gaza ceasefire talks and potential stimulus measures from China have provided a cushion to the downside.

Traders are awaiting further cues regarding the Fed’s rate-cut path, particularly from Fed Chair Jerome Powell’s upcoming congressional testimony. This week’s key US economic releases, including the Nonfarm Payrolls (NFP) report on Friday, are also expected to influence gold’s near-term direction.

From a technical perspective, Friday’s breakout above key resistance levels has bolstered bullish sentiment. However, the RSI hovering near the overbought zone suggests a need for consolidation before further upside momentum. Immediate support is seen around the $2,064-2,062 region, with a breach potentially exposing the 50-day Simple Moving Average (SMA) support near $2,034.

On the upside, the $2,088 zone presents an immediate hurdle, followed by the psychological $2,100 level. Continued buying pressure could drive prices towards the $2,025-2,030 range before potentially retesting the all-time peak reached in early December around $2,144-2,145.

US Dollar price today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Swiss Franc.

USD -0.03%-0.04%0.05%0.11%0.04%0.09%-0.07%
EUR0.02% -0.02%0.07%0.13%0.06%0.12%-0.04%
GBP0.05%0.02% 0.09%0.15%0.09%0.14%-0.02%
CAD-0.05%-0.06%-0.09% 0.06%-0.01%0.04%-0.10%
AUD-0.11%-0.13%-0.15%-0.06% -0.07%-0.01%-0.17%
JPY-0.04%-0.07%-0.12%-0.01%0.06% 0.04%-0.11%
NZD-0.09%-0.12%-0.14%-0.05%0.01%-0.06% -0.16%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).


What are interest rates?

Financial institutions charge interest rates on loans to borrowers, while savers and depositors get interest. They are impacted by base lending rates, which central banks set in reaction to economic fluctuations. Central banks are often tasked with maintaining price stability, which usually entails aiming for a core inflation rate of roughly 2%. If inflation falls below goal, the central bank may lower base lending rates to stimulate lending and help the economy. If inflation increases far over 2%, the central bank often raises base lending rates in an effort to reduce inflation.

How do interest rates affect currencies?

Higher interest rates often boost a country’s currency by making it more appealing to foreign investors looking to lodge their money.

How do interest rates affect the price of gold?

Higher interest rates generally have an impact on the price of gold because they raise the opportunity cost of keeping gold rather than investing in an interest-bearing asset or depositing funds in a bank. When interest rates are high, the price of the US Dollar (USD) rises, and since gold is valued in dollars, this lowers the price of gold.

What is the Federal Funds Rate?

The Federal funds rate is the overnight rate at which US banks lend to one another. It is the often mentioned headline rate established by the Federal Reserve at its FOMC meetings. It is specified as a range, such as 4.75%-5.00%, with the higher limit (5.00%) being the stated value.
The CME FedWatch tool tracks market expectations for future Fed funds rates, which influences how numerous financial markets react in anticipation of future Federal Reserve monetary policy decisions.

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