As the US dollar continues to weaken, gold price extends its rise. XAUUSD rose to its highest level since it began to be traded on the spot markets at $1980.88. As of this writing, the precious metal has given up some of its earlier gains and is trading at $1,973.26. It is up from where it began today’s trading at $1,941.10.
Aside from rising geopolitical tensions between the US and China, much of the dollar’s weakness can be attributed to the upcoming FOMC meeting on Wednesday. The policy-making body of the Federal Reserve is expected to keep rates at record lows. There has been some speculation that central bankers could bring up the possibility of negative rates too. Consequently, these have weighed on the dollar.
Earlier this morning, the US Mint announced that it would reduce its gold and silver supplies. As the department in charge of issuing coinage, this may have contributed to the rise in gold price because it limits the available supply.
On the monthly time frame, it can be seen that XAUUSD has blown past its September 2011 highs at $1,920.60. Near-term resistance for gold price could be at teh $2,000.00 psychological handle.
On the other hand, if the bullish momentum runs out of steam, XAUUSD could revisit its 2011 highs and test support at $1,920.60.