Gold (XAU/USD) price is on fire as the global preferred store of value surged to a new all-time high today. However, the price failed to close above the previous ATH and retraced. The precious metals remain in an uptrend amid a weakening US dollar. Our analysis shows that Gold might become of the best-performing assets in 2023.
XAU/USD pair started this week with a negative price action as it fell by 0.42% on Monday. This was followed by a strong rebound on Tuesday as the price surged above $2,000 for the first time in two weeks. Gold price is showing increased volatility today ahead of the European Central Bank’s rate hike decision.
The US Federal Reserve raised the interest rates by another 25 bps on Wednesday. While the hike was already expected, the hint at a pause in rate hikes was the biggest takeaway from this week’s FOMC meeting. Nevertheless, the Fed still remained hawkish and fully committed to its efforts to tame inflation.
Following the Fed’s announcement, the DXY index turned red and closed the day with a 0.7% drop. The dollar strength index is once again trading close to its year lows, which is a major support on its chart. If DXY breaks below the 101 level, I expect a Gold price per ounce to surge to above $2,100 very soon.
The all-time high price of any asset happens to be one of the biggest resistance on its chart. The same is the case for XAG/USD, which attempted to break above its 2020 all-time high of $2,075 today. However, the selling pressure took the price back below it after briefly trading above the key level.
In the coming days, I expect another retest of the $2,075 level. Considering the market structure, my Gold price forecast will remain bullish as long as the price stays above $1,973. In case of a pullback, the price action at the $1961 level will be very critical.
I’ll keep posting my updated outlook on Gold and other assets in my free Telegram group, which you’re welcome to join.
This post was last modified on May 04, 2023, 13:13 BST 13:13