The gold price slipped below the $2,000 level on Monday despite safe-haven demand from escalating conflicts in the Middle East. However, it found support at $1,990 and reached the $2,000 threshold again. Investors were cautiously waiting ahead of the US Federal Reserve’s policy meeting this week. According to analysts, gold is aiming for further gains amid a potential ‘Bullish Cross’.
““Tension will create a basis for the gold price.”
cryptokoin.comAs you follow from , gold surpassed the psychological threshold of $ 2,000 with a strong move last week. Although it started the week with a decline, the yellow metal continues to find support from geopolitical developments. However, market players are now waiting for the Fed’s policy decision to be announced on Wednesday. The general expectation is that the Fed will not change interest rates. However, the focus will be on Chairman Jerome Powell’s comments. City Index senior analyst Matt Simpson shares the following assessment:
Strong economic data means it will force the Fed to maintain its hawkish tone despite raising concerns about the Middle East conflict. This will create a floor below gold prices, which seemed quite comfortable above $2,000 at the beginning of the week.
Geopolitical risks and investor sentiment
The gold price briefly climbed above the $2,000 level due to the impact of geopolitical tensions in the Middle East. Meanwhile, investors are remaining cautious in anticipation of the Fed’s upcoming policy meeting. While spot gold experienced a small retreat, Comex gold contracts for December delivery rose.
Israel’s air strikes on areas near Gaza escalated the conflicts in the Middle East and directed investors to safe haven assets. The gold price exceeded the $2,000 threshold for the first time since mid-May. In this environment of uncertainty, market players are closely watching the Fed’s policy statement this Wednesday, which could significantly affect gold.
Economic data and inflation concerns
Latest US economic indicators pointed to an increase in consumer spending, keeping monthly inflation warm. Rising inflation, currently running above the Fed’s 2% target, remains a global economic risk for next year, according to a Reuters poll. While gold serves as a hedge against inflation, it is possible that an increase in interest rates could reduce the attractiveness of gold.
Despite strong economic data, the Fed will likely maintain its hawkish tone, especially due to ongoing tensions in the Middle East. Although experts predict that a rate hike is inevitable, all eyes are on the Fed regarding timing. Interest rate increases may affect borrowing costs and may also increase the returns on interest-bearing assets.
Gold price short-term outlook: Cautious rise
Market analyst James Hyerczyk looks at gold’s short-term technical outlook. Gold appears to have found a base around $2,000, primarily due to geopolitical risks and inflation concerns. However, the Fed’s upcoming policy meeting serves as an important wild card. If the central bank chooses to increase interest rates, it is possible that this move will reduce the shine of gold. However, the outlook for gold remains cautiously bullish in the short term.
Gold price technical analysis: There is room for further upside
Market analyst Dhwani Mehta explains what he sees in the technical picture of gold as follows. “Bull Flag” remains in play. In this environment, gold price witnessed a surprising rally. In this move, it managed to surpass the key threshold of $ 2,000 on Friday. The 14-day Relative Strength Index (RSI) indicator is just above the overbought zone. This indicates that there will be further increases in the future. The 21-day Simple Moving Average (SMA) is poised to penetrate the 50-day SMA to the upside. If this occurs on a daily closing basis, a ‘Bullish Cross’ will be confirmed. This will open the door for a new rise.
In such a case, an extension of the ongoing uptrend towards the mid-May high of $2,020 cannot be ruled out. Ahead of this, there is a retest of multi-month highs of $2,009. If it fails to maintain the $2,000 level, it is possible that gold could see a correction towards the $1,990 round level. Below this, Friday’s low of $1,977 will come into play. A break below this level will prompt gold sellers to test the static support at $1,963.
To be informed about the latest developments, follow us twitter‘in, Facebookin and InstagramFollow on and Telegram And YouTube Join our channel!