Gold price tanked on Monday shedding nearly 25 points after the XAU/USD charts dipped 1.5% in the day’s trade. The price of gold fell to $2,020 and fears gripped the commodity markets of a dip below the $2,000 mark. However, gold recovered on Tuesday and the price is now trading above the $2,030 level. The XAU/USD charts show gold price hovering around $2,035 with an upsurge of nearly 0.5% in 24 hours.
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Gold Price Forecast: Will XAU/USD Rise Further?
The commodity markets remain on a slippery slope as the US Treasury yields deliver higher returns this month in January 2024. The US Treasury yields’ returns affected both the stock and the commodity market, and gold prices in general. Institutional investors are now opting for sovereign US Treasury bonds as they offer better CAGR compared to other sectors.
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However, there is still optimism left in the gold market as the US dollar Index (DXY) is dipping for three consecutive days. The US dollar Index has come dangerously low to 102 points from its previous monthly high of 108 points. Another leg-down could send the DXY below the 100-point mark and trade in double digits between 97-99.
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The development could prove beneficial for gold price in the short term as the XAU/USD performs better when the US dollar is down. Therefore, gold price could see an upward swing of $2,050 in the XAU/USD charts this month in January 2024.
On the downside, gold price could fall to the $2,010 level if the US dollar strengthens due to inflation cooling down. Inflation in the US stands at 3.1% and is above the 2% trajectory of normalcy. However, inflation has been steadily cooling down since a year from 6.5% to the current 3.1%.
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Inflation cooling down makes the US dollar stronger as it aids the robust economy with jobs and consumer spending. Gold price could experience a downturn as other avenues will deliver better returns than the yellow metal.