After a slight decline the day before, the gold price (XAU/USD) is seeing new bids and is still quite close to the two-week high it reached last Thursday.
Technical Overview
Technically speaking, any further advance is likely to run into some resistance around the $2,041-2,042 region or above a two-week high reached last Thursday. Additional gains can be facilitated by some follow-through purchasing, which will validate a break of the 50-day Simple Moving Average (SMA) barrier. Oscillators on the daily chart have only recently begun to show signs of strength, so the price of gold may then confront the next significant obstacle in the vicinity of the $2,065 supply zone. Regaining the $2,100 round figure threshold for the first time since early December 2023 may be within reach with continued progress.
However, the overnight swing low, which was around $2,025, may stave off further declines before the $2,000 psychological barrier and the 100-day SMA, which is now in the $2,009 range. A substantial breach of the latter will tip the scales in favor of bearish traders in the short term and push the price of gold down to the $1,984 area, which is the 200-day SMA support level, which is located close to the $1,967–1,966 area.
Fundamental Overview
After a slight decline the day before, the gold price (XAU/USD) is seeing new bids and is still quite close to the two-week high it reached last Thursday. Following another run down in US Treasury bond yields, which is considered a significant factor acting as a tailwind for the commodities, the US Dollar (USD) is still on the defensive. In addition, ongoing concerns over Middle East geopolitical unrest contribute to the precious metal’s relative safe-haven reputation.
Due to hawkish forecasts from the Federal Reserve (Fed), any significant increase in the price of gold appears constrained. In light of persistently rising inflation and a robust economy, the FOMC meeting minutes—as well as statements from multiple Fed officials—implied that the US central bank would maintain higher interest rates for an extended period. The US bond yields and the greenback should benefit from this, which could discourage traders from making aggressive wagers on the yield-free yellow metal.
For short-term chances later this Tuesday, market players are now focusing on the US macro data, which includes the Richmond Manufacturing Index, the Conference Board’s Consumer Confidence Index, and Durable Goods Orders. But all eyes will be on Thursday’s US Personal Consumption Expenditures (PCE) market Index, which might offer new insights into the Fed’s rate-cutting trajectory and give the gold market a new direction.
Conclusion
A complex interplay of macroeconomic indicators, geopolitical events, inflation, interest rates, USD strength, and market fundamentals influences gold price movements. By learning to interpret price charts and using both technical and fundamental analyses, traders can better capitalize on the opportunities presented by the gold market. Implementing robust risk management strategies ensures that potential downsides are mitigated and informed decisions lead to successful outcomes. Whether you are a seasoned investor or new to the markets, understanding gold price dynamics can lead to more profitable trading in this precious metal.
