Gold’s $2k daily close tough nut to crack, so far

Spot gold is once again easing away from the $2000 handle, after having twice this week briefly surfaced above that psychologically-important mark.

From a technical perspective, gold appears to be clearing even more froth as its 14-day relative strength index pulls back once more from the 70 threshold which marks “overbought” conditions.

 

Although the precious metal could bring an end to a winning run of three consecutive weekly gains, gold has certainly benefitted from the market’s repricing of the Fed rates outlook.

The thought of peak US rates within reach has bolstered demand for the zero-yielding precious metal, with Fed Funds Futures now pointing to a 45% chance of a 50 basis point rate cut by the Fed in July.

As long as market expectations for a 2023 rate cut remains intact, gold may well secure a daily close above that $2k level.

Bullion bulls are also savouring the prospects of repeating the March 2022 peak at $2070, should contagion and recession risks ramp up which in turn may force the Fed to officially reverse its rate-hiking campaign.

Between now and the next FOMC meeting, markets are set to turn their attentions back to the regular set menu of US jobs and CPI data, while keeping close watch over any further developments surrounding the global financial system.

For the immediate term, spot gold has to attract enough suitors to keep a sustained presence above $2,000.

Otherwise, a notable easing of contagion and recession fears should push the precious metal back down into the mid-$1900 region.