Gold price is hovering above 1,980 on Friday. Thus, it provides a breather after Thursday’s choppy trading. The focus is shifting to US inflation data as markets weigh a possible currency intervention by Japan, strong US GDP data, ongoing Middle East concerns and upbeat Amazon earnings.
Gold price continues its winning streak
Gold continues its optimistic momentum for a third day, benefiting from the improving market sentiment that limited the upward attempts in the US Dollar (USD) and US Treasury bond yields. Investors are cheering post-market US tech gains. Market optimism appears to be buoyed by traders’ recent developments surrounding the Middle East conflict.
The gold price will continue to survive geopolitical tensions and US government shutdown concerns. Broader sentiment, geopolitical updates, weekend flows and bond market movements will be key to gold’s direction. Markets are likely to pay limited attention to US Personal Consumption Expenditures as Thursday’s US Q3 GDP report already includes quarterly PCE inflation figures. A resilient U.S. economy supported “the Fed’s view of higher interest rates for longer.” However, the data failed to inspire US Dollar and US Treasury yields. Meanwhile, the gold price extended its corrective decline from a weekly high of $1,994 in an initial reaction to US growth figures. However, it managed to register a marginal rise on Thursday.
Gold is currently a function of the Israel-Hamas conflict!
Israel continues its uninterrupted air strikes against the besieged Palestinian territories. This increases anger in the Arab world. Meanwhile, Israel carried out its largest land attack on Gaza during the night in its war with Hamas. Capital.com financial market analyst Kyle Rodda comments on the impact of the developments on the gold price as follows:
The gold price will be a function of the Israel-Hamas conflict as long as there is a risk of escalation. Gold remains where it is due to geopolitical risks and prices are diverging from typical fundamental factors… If real yields and the dollar were a factor, gold would be lower.
Gold’s survival in its current state depends on this.
cryptokoin.comAs you follow from , gold gained nearly 9% as investors sought to escape the potential fallout from the Israel-Hamas war that escalated earlier this month. But expectations that U.S. interest rates will remain high for longer have kept prices below the $2,000 ceiling, which was last surpassed in May. Investors are focused on the U.S. personal consumption expenditures (PCE) price index, due out later in the day, for clues about what to expect from the Fed’s policy meeting next week.
According to Praveen Singh, vice president at BNP Paribas Sharekhan, gold has a high geopolitical premium. Therefore, Singh says that gold needs to be constantly fed by geopolitical developments to survive at current levels.
Gold price technical analysis: There is upside potential!
Market analyst Dhwani Mehta evaluates the technical outlook for gold as follows. Gold price is gaining momentum ahead of the next rally as the Bullish Flag remains in play and keeps buyers hopeful. The 14-day Relative Strength Index (RSI) indicator has entered the overbought zone. This points to further upside potential. The immediate resistance for the gold price lies at $1,997, a five-month high. Moreover, acceptance above the $2,000 barrier will be critical on a weekly closing basis to unlock additional gains.
The next relevant upper hurdle lies near the mid-May high at $2,020. Alternatively, a renewed rejection from the monthly high at $1,997 could strengthen gold sellers. This is likely to trigger a correction towards the previous day’s low at $1,972. A continued move below the latter will prompt gold sellers to test the static support at $1,963. Further south, it will test the psychological level of $1,950 again.
Gold futures transactions: Is a correction coming?
The number of open positions in gold futures markets fell on Thursday for the first time since October 16, according to preliminary data from CME Group. Thus, approximately 1.4 thousand contracts decreased. Volume followed suit, shrinking by approximately 24.7 thousand contracts. This shows that it continues its erratic performance.
Meanwhile, the gold price further extended its monthly recovery on Thursday. However, the daily rise was due to decreasing open interest and volume. According to market analyst Pablo Piovano, this pointed to the possibility of a corrective move in the very near term. In the longer term, the precious metal continues to target the critical barrier at the $2,000 level.
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