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Gold aiming for the sky – will the rally last?

Gold finally looks like it could recover most of it's lost value in the near future.

Gold with positive outlook

Gold price enthusiasts have resumed the buying this week, allowing the precious metal to break out of the negative trend that drove gold price lower in February. Gold prices rose on Friday and were poised for their first weekly increase in five weeks.

Recent remarks from Fed officials provided greater clarity on the course of monetary policy this year. President of the Atlanta Fed Raphael Bostic reinforced the argument for a 25 bps raise in March. On the other hand, Fed governor Christopher Waller stated that controlling inflation as well as economic progress could necessitate a rate peak of 5.4%.

More to read: S&P 500 jumps amid optimistic sentiment

Gold’s ability to climb despite rising US Treasury bond rates has been particularly amazing. These factors typically strengthen the greenback and impact on yieldless commodities.

Positive PMI data from China, both in the Manufacturing and Services sectors, have significantly boosted demand for gold. China is a massive market for the yellow metal.

“The price increase seen this week despite even higher interest rate expectations could indicate that the correction of the gold price is more or less complete and that the price may have bottomed out at the beginning of the week.”
Strategists at Commmerzbank

A return to $2,000?

Spot gold increased 0.44% to $1,844 per ounce, and futures contracts rose 0.2% to $1,844.25 per ounces. This week is expected to be the first positive week for both assets since mid-January.

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The price of gold decreased by more than 5% in February. XAU/USD is presently trading roughly $40 or 2% higher than it was on Tuesday, at $1,844. It seems that gold has rebounded from its lowest point.

Gold futures were not able to touch the 200 day SMA and rebounded before doing so. In case bulls will continue their effort, we could be seeing prices return to $1,960 from February.

gold

Gold futures 1D chart, source: tradingview.com, author’s analysis

Tomáš is a financial reporter with US markets as his main field. Tomáš is an aspiring author and entrepreneur aspiring to help people get better in financial knowledge.

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