Gold prices inched higher on Monday as the U.S. dollar eased. The greenback fell from its highest level in almost two decades and revived bullion demand from buyers using rival currencies. But trading is expected to be thin today because of the Juneteenth holiday.
Spot gold is currently trading at $1,840.49 per ounce as of 0830 GMT.
City Index senior market analyst Matt Simpson suggested that gold will find it hard to make directional moves today without a fresh catalyst. Liquidity and volatility are relatively lower because of the public holiday in the U.S. He also noted that gold has been in a choppy range for a month now, making it a traders’ market. Simpson predicts traders to sell rallies below $1,880 and buy dips above $1,800.
FxStreet senior analyst Dhwani Mehta said gold would struggle to breach the horizontal 21-DMA, now at $1,848. If the bullion closes above that level, it could retest the psychological mark at $1,850. However, the 14-day Relative Strength Index remains below the midline, indicating limited upside attempts. On the downside, Mehta sees immediate support at $1,834. If the yellow metal slips below the $1,830 level, it could trigger a sharp selloff.
Mehta added that the market would be monitoring Fed Chair Jerome Powell’s testimony on the central bank’s semi-annual policy report. If he maintains a hawkish stance, the bullion’s upside potential would be limited. Powell’s statement has a significant impact on the dollar’s strength. On Friday, when he reaffirmed the Fed’s commitment to price stability, the dollar got a boost and prevented gold from breaching the $1,858 barrier.
Meanwhile, China stood pat on its benchmark lending rates for household and corporate loans. In Europe, ECB policymaker Klaas Knot said that the central bank might implement multiple interest rate hikes of 50 basis points if inflation continues to rise. He expects a total of around 200 basis points of hikes this year.
In physical trading, gold demand in India improved, but retail buying remains weak. Jewelers have started making purchases even though their expected decline in bullion prices did not materialize. In China, COVID-19 lockdowns continue to deter buyers. A local trader noted the lack of huge imports into the country, but he expects demand to pick up in August when the market starts to operate normally.
In a related development, the holdings of the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, rose 1.1% on Friday to 1,075.54 tons.