The gold market, still seeking stability, is going through a period of strategic waiting. Investors, attentive to signals from the American Federal Reserve (Fed), are scrutinizing the imminent speech by its president, Jerome Powell, which could influence the course of monetary policies. A look back at the main issues and current dynamics.
A trajectory limited by yields and expectations on the Fed
For two days, the gold price (XAU/USD) shows a slight progression, without demonstrating any real upward momentum. This stagnation mainly results from cautious expectations surrounding the Fed's next decisions. While markets continue to forecast a possible cut in key rates, recent economic data, notably the increase in US bond yields, is limiting the precious metal's momentum.
Also read: A complicated day for the gold price
Furthermore, the US dollar, although hampered by moderate demand, maintains a certain resilience. This situation, combined with inflation that is still far from the Fed's targets, is fueling speculation about a more restrictive monetary policy in the months to come.
Geopolitical tensions, fragile support
At the same time, concerns linked to international tensions provide moderate support for the gold market. Recent threats of protectionist policies in the United States, as well as growing tensions in the Middle East, are increasing volatility. For example, new airstrikes in Israel and trade tensions with partner countries like China are increasing interest in safe haven assets, including gold.
However, these elements remain insufficient to fully counter the effect of pressures linked to bond yields. Investors are also watching China's services PMI, whose decline reflects a fragile economic recovery in the world's second-largest economy.
Technical analysis: key resistances to watch
From a technical point of view, the gold price still oscillates in a consolidation phase. Support levels near $2,600 remain a critical threshold for traders, while significant resistance, around $2,666 and $2,700, limits any significant progress.
The daily chart reveals neutral oscillators, reflecting a lack of investor conviction. A break below $2,579 could intensify bearish pressures, while a sustained break above $2,722 could signal a return of the uptrend.
Frequently Asked Questions: Interest Rates and Impact on Gold
What is an interest rate?
Interest rates represent the cost of borrowing for businesses and households. Set by central banks, these rates directly influence lending and savings conditions. In times of high inflation, raising rates helps stabilize prices, while lowering them stimulates growth.
How do they influence the price of gold?
A high interest rate penalizes gold because it increases the opportunity cost of holding a non-yielding asset, like the yellow metal. Additionally, rising rates often support the U.S. dollar, which tends to depress the dollar-denominated price of gold.
Towards a decisive outcome
The speech by Jerome Powellalong with jobs data expected later this week, should clarify the near-term trajectory of the gold market. Investors remain cautious, but a firmer stance from the Fed could upset this fragile balance.
