Gold prices surge amid economic concerns: What’s behind the rally?

The sudden surge in initial jobless claims and a sharp decline in consumer confidence underscored concerns about the economy, bolstering gold prices

Exclusive by Omer Faruk Bingol — Gold prices saw a significant uptick in the final week of April, breaking the sideways movement that had persisted throughout the month. Notably, in the last two trading days of the week, there was a marked increase. The price of gold per ounce moved from $2,310 to $2,375, while the price of a gram of gold surged from 2,390 TL to 2,465 TL.

With an approximate 2% gain over the week, gold prices brought good news for investors after weeks of stagnation. Additionally, prices moved closer to critical resistance levels as they distanced themselves from support zones.

Why did gold prices rise?

Last Thursday, the weekly initial jobless claims report in the United States revealed a figure of 231,000, surpassing the expected 215,000. This unexpected increase suggests a rising number of job losses and signals a cooling job market.

Moreover, the University of Michigan’s Consumer Confidence Index for May plummeted to 67.40, a significant decline from the previous 77.20, indicating weakening consumer sentiment. Both these factors heightened expectations of a dovish stance from the Federal Reserve, thereby supporting gold prices.

What’s the gold price on May 13th?

In the free market, the price of a gram of gold starts the new week at ₺ 2,440. Meanwhile, at the Grand Bazaar, the price fluctuates within the range of ₺ 2,430 TL to ₺ 2,470 for buying and selling. Quarter gold coins are being sold for ₺ 4,026, half gold coins for ₺ 8,051, and full gold coins for ₺16,290 in the morning hours. On the global stage, the price of an ounce of gold continues to hover around $2,355. Despite a 2% increase last week, both gram and ounce gold prices start the new week slightly below Friday’s closing.

Key levels to watch in gold trading

The 5-day average for gold stands at $2,348 per ounce, while the 22-day average sits at $2,359 per ounce, indicating a search for equilibrium between the two averages. Analysts suggest that if gold maintains stability above $2,350, the possibility of a move towards $2,390 increases.

They also highlight the significance of $2,320 as a crucial support level. In the gram gold market, attention is drawn to the support level of $2,420, suggesting potential buying opportunities as prices approach support levels.

Expectations

Conflicts in regions such as Israel-Hamas and Russia-Ukraine, coupled with ongoing uncertainties regarding ceasefires and relief operations in the Middle East, are keeping geopolitical risks alive. Meanwhile, one of the most critical data points for Fed policies and gold prices, the U.S. Consumer Price Index (CPI) for April, is due to be released this week.

If the CPI data indicates a moderation in inflationary pressures, gold could find support for a move towards $2,400. At the beginning of the week, the Dollar Index (DXY) stood at 105.00, and the yield on the U.S. 2-Year Treasury Bond was above 4.80%, indicating a relatively strong dollar. However, a sideways trend suggests a cautious outlook.

Source: Newsroom