Despite the strong US dollar and bond yields, gold prices have remained resilient due to ongoing conflicts in the Middle East. ANZ Bank strategists say further gains depend on the Fed. Market analysts state that the technical outlook is in favor of the bulls.
For gold prices, more depends on the Fed!
Gold prices continue their attempt to surpass $2,000 as investors flock to safe-haven assets. Further gains also depend on the Fed’s rate cycle approaching its end, according to ANZ Bank strategists. In this context, strategists make the following assessment:
The precious metal has gained more than 8% since Hamas attacked Israel. The war looks set to continue driving gold haven flows. However, further price gains also depend on the Fed approaching the end of its interest rate cycle. This will cause US yields to decline, reducing the opportunity cost of gold. Meanwhile, demand from the physical market is also strong, from both central banks and consumers.
Investor sentiment shifts with conflict in Middle East
Gold prices rose earlier this week, especially due to the ongoing conflicts in the Middle East. Despite this rise, gains were capped by a strong US dollar and bond yields, supported by new home sales rising to a 19-month high. These data further strengthened the expectations that high interest rates will continue until 2024. The strength of the dollar and rising yields put downward pressure on gold in general. However, the yellow metal largely manages to maintain its safe-haven status in turbulent times.
For gold prices, all eyes are on ECB and Fed decisions
Markets are holding their breath for upcoming economic indicators and policy decisions. Investors are especially focused on the European Central Bank’s policy results and the US GDP figures to be announced today. Additionally, the Personal Consumption Expenditures (PCE) price index, which will be announced on Friday, also attracts great attention. This index, a key inflation indicator, will likely influence the Fed’s interest rate decision next week. Both European and US monetary policies can significantly affect gold price movements in the short term.
Geopolitical influence versus macro events
Geopolitical tensions cause short-term movements in gold prices. However, their effects tend to be temporary compared to macroeconomic events or financial crises. In such cases, global authorities may implement aggressive monetary and fiscal policies. This generally strengthens gold. However, the situation in the Middle East continues to have a significant impact on gold prices. Moreover, it causes temporary increases even in the face of opposing economic indicators.
Gold remains a preferred asset during times of economic and geopolitical unrest. cryptokoin.comAs you follow from , higher interest rates tend to reduce the appeal of gold. However, the current environment maintains interest in the shiny metal. Investors are closely monitoring both the situation in the Middle East and upcoming economic indicators to make their next moves.
Short-term outlook for gold prices: Bullish trend prevails
Market analyst James Hyerczyk evaluates the short-term outlook for the gold price. In the near future, gold’s trajectory looks uncertain, rocked by opposing forces of geopolitical tension and economic fundamentals. The market expects the Fed to continue increasing interest rates. However, it is possible that this situation will be balanced by developments in the Middle East and future economic data. Therefore, investors should be prepared for ongoing volatility in the gold market.
According to daily chart data for gold prices, the current price of $1,987.315 is above both the 200-day moving average of $1,932.23 and the 50-day moving average of $1,910.64. This indicates a bullish trend in the short and long term. Minor support holds at $1,952.21. The market has already surpassed the major support level at $1,930.64. Market sentiment is bullish as there is no established resistance level and the asset is trading above key moving averages.
Gold price technical analysis: There is enough space above!
Another market analyst, Dhwani Mehta, also looks at the technical picture of gold. As seen on the daily chart, gold prices confirmed the ‘Bull Flag pattern’ after closing above the falling trend line resistance at $1,976 on Wednesday. The 14-day Relative Strength Index (RSI) indicator is hovering in the overbought zone. This shows that there is enough room for upward movement. From a short-term technical perspective, nothing changes for gold prices. Because it still remains a ‘buy the dip’ trade. The nearest resistance currently stands at $1,988, the July 20 high. Gold buyers will then flex their muscles towards a five-month high of $1,997, reaching the $2,000 barrier.
On the other hand, if gold prices are rejected higher, the static support at $1,963 will come into play in the correction. Further south, the yellow metal will retest the psychological $1,950 level. Gold sellers will target the October 19 low of $1,945 if the downward move accelerates.
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