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Gold Prices In the Near Term Amid Hawkish US Monetary Policy

Gold prices have edged lower on Monday, but remain above two critical psychological support levels . The precious metal traded at $2042.90 an ounce after losing 0.38% at the futures market. Similarly, spot market gold was marginally down, 0.04%, trading at $2,034.30 at the time of writing. XAUUSD will be shaped by Wednesday’s release of US GDP data for the fourth quarter of 2023.

The yellow metal has been on the uptrend over the past week against the dollar. However, the reiteration of hawkish Fed policy during the period has curtailed gains. Furthermore, high-yielding US treasuries weighed down in the commodity. Investors typically move their money from non-yielding gold to high-interest assets like treasuries when their yields rise. However, yields on the benchmark ten and five-year bonds have climbed down and stand below 4.300%, having lost a basis point each at press time.

XAUUSD could get some impetus from Monday’s auction of 2-year and 5-year Treasury Note auctions. In addition, US New Home Sales data will be out on Monday, and a forecast-beating reading will tilt the scales in favour of the dollar. Consensus estimates project the figure to read 680k, which could mark the second consecutive rise, creating bullishness around the dollar.

Looking ahead, gold will face its biggest test on Wednesday when the US releases its GDP figures for Q4 2023. The consensus forecast projects a+3.3% growth, and a shift on either side of the figure could create a significant impact in the gold market.

Technical analysis

Gold has pivoted at 2055, and the momentum indicator signals control by the bears.  In the near term, look for support at 1970. However, a break below this point will push the support to 1930. However, if the momentum turns to the upside and the price steadies above 2055, the bulls will attempt to reach 2090. A successful breach could build the momentum to target 2135.