Weekly Outlook on Gold - 09 February 2024

Gold prices experienced a slight dip on Friday, despite a weakening dollar and bond yields, as markets remained cautious about the possibility of prolonged high U.S. interest rates. The decline in the prices occurred amidst steady economic data from the United States and a series of statements from Federal Reserve officials indicating a hawkish stance, which led to reduced expectations of interest rate cuts in the near future.

Goldman Sachs noted that while the likelihood of delayed U.S. rate cuts could pose challenges for gold prices, various factors would likely limit significant losses in the precious metal. Analysts anticipate continued strong demand for gold from central banks and emerging markets. As a result, Goldman Sachs maintained its 12-month target price for spot gold at $2,175 per ounce. Additionally, heightened geopolitical tensions, such as the recent rejection of an Israel-Hamas ceasefire, suggest increased safe-haven demand for gold in the short term.

From a technical perspective, gold prices seem to be consolidating, showing little directional bias. Despite slight fluctuations, they have managed to hold above key support levels. However, it's essential to note that gold prices have been struggling to gain momentum amidst a backdrop of uncertainty regarding U.S. interest rates and economic data. This uncertainty has led to a lack of clear trends in the gold market.

Key support levels to watch include psychological levels around $2000 and $1960 per ounce. On the upside, resistance levels are seen around $2085 and $2140 per ounce. 

Traders are advised to monitor any significant developments in U.S. economic data, particularly indicators related to inflation and interest rates, as they could influence the direction of gold prices in the near term. Additionally, geopolitical tensions and any shifts in investor sentiment towards safe-haven assets could also impact gold's trajectory.

Important Key Levels: