empty
14.07.2023 10:55 PM
Is Gold heading to $2,000?

This image is no longer relevant

Gold is experiencing a slight decline after a vigorous rise yesterday and is consolidating near $1,955.

As of 17:10 UTC+3, the price of August gold futures on the Comex exchange has dropped by 0.44% to $1,955.25 per ounce. By that time, September silver futures had also declined by 0.24% to $24.82 per ounce.

Yesterday, the XAU/USD pair reached a new record high since June 16, hitting the level of $1,963. At the end of the trading week, the market is experiencing a corrective decline, despite the overall favorable fundamental background for buyers.

The primary factor driving the increase in precious metal prices in recent days has been the weakness of the U.S. dollar. However, it is fair to mention that the dollar's exchange rate was quite stable this morning and even increased by 0.06% to reach 99.83 at the time of preparing this material.

Nevertheless, the U.S. Consumer Price Index report released on Wednesday significantly weakened the positions of the American currency against other majors. The annual consumer inflation rate in the U.S. fell from 4% to 3% in June, although analysts had predicted a decrease to 3.1%. The core inflation in the world's second largest economy decreased from 5.3% in May to 4.8% in June. This decline was more substantial than what experts had expected (they only anticipated a decrease in inflation to 5%).

The Producer Price Index data, released on Thursday, also showed a decline, from 0.9% to 0.1% on an annual basis. The core index, in this case, corrected down from 2.8% to 2.4%.

These factors have influenced analysts to revise their earlier forecasts regarding U.S. monetary policy. It is now expected that the Federal Reserve will only raise interest rates once by the end of this year, and will announce it at the July meeting.

According to the CME FedWatch tool, indicating expectations for the U.S. key interest rate, the probability of a rate hike this month exceeds 90%. However, the probability of another hike after July is estimated at 15%, compared to a previous level of 40% earlier this week.

The U.S. dollar was the biggest loser amid such news, while commodity prices, which are denominated in the American currency, benefited.

In addition to these factors, the demand for gold is supported by the decline in U.S. Treasury bond yields, which serve as an alternative cost of holding non-interest-bearing metals. The yield on U.S. Treasury bonds has reached multi-month lows and continues to decline.

The yield on 2-year Treasury notes has fallen to 4.65%, while the yield on 10-year Treasury notes dropped to 3.80%. Over the past week, the yield on 2-year bonds decreased by 6%, while the yield on 10-year bonds decreased by only 3%.

As the U.S. dollar and Treasury yields decline, and the Federal Reserve plans a long-term pause in interest rate hikes, holding long positions with a target of $2,000 is the most reasonable decision for the XAU/USD pair.

Andreeva Natalya,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Wall Street surges: Nasdaq soars 2.74% as tech stocks drive market higher

Procter & Gamble and PepsiCo fell after cutting forecasts, while Hasbro and ServiceNow jumped following their earnings reports. March durable goods orders surged more than expected. Alphabet beat revenue expectations

12:52 2025-04-25 UTC+2

US Market News Digest for April 25

US stock indices closed higher for the third straight session, buoyed by a sharp rally in the technology sector. The Nasdaq surged 2.74%, driven by strong earnings reports from companies

Ekaterina Kiseleva 11:42 2025-04-25 UTC+2

Wall Street on the rise: Nasdaq soars 2.74%, tech leads market higher

Procter & Gamble, PepsiCo fall after forecast cuts Hasbro, ServiceNow jump after results March durable goods jump more than expected Alphabet beats revenue estimates, shares rise after hours Asian markets

Thomas Frank 07:15 2025-04-25 UTC+2

Earnings parade: From Adidas sneakers to Boeing jets, quarterly reports push the market

Indices up: Dow 1.07%, S&P 500 1.67%, Nasdaq 2.50% Bessent calls US-China tariffs unsustainable, Trump open to talks Tesla, Boeing rise after quarterly results European stocks fall as investors weigh

Thomas Frank 13:15 2025-04-24 UTC+2

US Market News Digest for April 24

US stock indices, including the S&P 500 and Nasdaq 100, posted solid gains on optimism about progress in trade negotiations. Despite the lack of a clear position from the White

Ekaterina Kiseleva 11:05 2025-04-24 UTC+2

Trump acts, markets react: Nikkei up 2%, USD rallies

The Nikkei surged more than 2%, S&P 500 futures extended their rally, and the dollar jumped after US President Donald Trump said he has no plans to fire Fed Chairman

12:35 2025-04-23 UTC+2

US Market News Digest for April 23

The US market is showing renewed signs of instability. Positive signals about a potential de-escalation in the trade conflict with China are fueling hope, but experts warn against excessive optimism

Ekaterina Kiseleva 12:17 2025-04-23 UTC+2

Trump says markets react: Nikkei up 2%, dollar strengthens, China awaits outcome

Nikkei jumps more than 2%, S&P 500 futures continue rally Dollar jumps as Trump says he has no plans to fire Powell Hopes for China tariff easing, but no deal

Thomas Frank 10:52 2025-04-23 UTC+2

US Market News Digest for April 22

The S&P 500 and Nasdaq 100 continue to slide as mounting concerns over slowing economic growth and the impact of trade tariffs weigh on sentiment. The market remains volatile, with

Ekaterina Kiseleva 11:13 2025-04-22 UTC+2

Trump, Fed, and gold at $3,000? Markets respond to alarming signals

Investors are worried about the Fed's independence under Trump. US assets are falling, and the dollar is at a three-year low against the euro. Safe-haven currencies like

11:46 2025-04-21 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.