Posted May 13, 2023 14:21PM
Updated May 13, 2023 14:32PM
Investing.com – The US dollar index rose strongly at the end of last week, after key comments from Federal Reserve members confirmed the Fed’s commitment to keeping interest rates high for a longer period.
Also, data was issued on Friday, which frightened the market about the future path of inflation, as the Michigan index of inflation expectations indicated an increase, as expectations for the month of May indicated an increase from 4.4% to 4.5%, which pushed the dollar index to 102.532 levels.
As for gold, after rising to levels of $2,055 an ounce, futures contracts closed at $2,015 an ounce, and spot contracts recorded $2,010 an ounce.
Analysts point out that the rise in the dollar index is the main reason for the decline in the attractiveness of gold, despite the presence of incentives.
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These changes and uncertainty in the market are causing the rise of gold to be somewhat confused.
There are still risks in the market, such as:-
- The possibility of the US economy entering a 100% recession within the next 12 months
- The Fed stopped raising rates
- Deposits of US banks declined, and lending activity decreased in light of fears of the collapse of other US banks
- Analysts say that gold could fall below $2,000 an ounce, and the first strong support appears at $1,965 an ounce.
However, analyst Ed Moya of Onda believes that gold will reach $2,100.-
In the near term, the level of $1,995 will show technical importance, and breaching it will push for a more violent correction in the market.
In general, the level of $1,926 an ounce is the main level at which the bullish trend started, and breaking it would mean the collapse of the trend and gold losing its attractiveness.
Next week, gold awaits an appointment with Federal Reserve Chairman Jerome Powell and former Federal Reserve Chairman Ben Bernanke at a research conference.
The market is also awaiting data on the Empire State Manufacturing Index, retail sales, industrial production, homes started, and building permits.
Next to jobless claims, the Philadelphia Fed manufacturing index and existing homes.
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Written by: Investing.com