Jakarta, GIC Trade – World gold prices are gaining new momentum as US bond yields remain weak and the US dollar continues to trade at a seven-month low.
 
This is because market participants expect that slower interest rates will continue to weigh on the greenback. The US dollar index (DXY) is at a seven-month low of 102 points. The market expects an increase of only 25 basis points from the Federal Reserve at next month's policy meeting.
 
Kitco.comOle Hansen, chief commodity strategist at Saxo Bank, said in a note on Tuesday that "The yellow metal found fresh demand from traders and investors saw a better outlook as last year's headwinds, from interest rate hikes to rising yields and the dollar, became an attraction as interest rate hikes finally paused while yields and the dollar weakened amid concerns about the economic outlook".
 
Hansen also added that he sees the potential for higher gold prices because gold has historically experienced a significant rally following a peak in interest rates.
 
"The market is currently pricing in one or two further U.S. rate hikes before pausing at or below 5%. If history repeats itself, gold may have significant further gains," he said.
 
Fundamentally, there is still a great opportunity for gold prices to rise amid the Fed's slower interest rate sentiment. Then how technically, see the following analysis:
 
Technical Analysis
 


Gold prices were observed to be corrected to test the 1920.53 support level towards the next support at 1906.40. Gold's decline was also supported by the RSI indicator which moved down towards the 30 RSI level. However, if the price is able to break through the resistance of 1942.32, then the bullish bias continues until the next resistance at 1957.00.
 
This analysis is a fundamental and technical view used by the author, not a suggestion or invitation. To get more information click on the image below.