Gold prices surged to a peak of $2,417 per ounce as the conflict between Israel and Iran intensified, prompting investors to seek safe-haven assets. Prices have since pulled back slightly, stabilizing around $2,394 after indications from Tehran suggesting no immediate retaliation plans. This eased initial anxieties in the market.
The rise in gold is further supported by the decline in US Treasury yields and the US dollar. However, ongoing hints from Federal Reserve officials regarding restrictive monetary policy may put upward pressure on yields in the near future, potentially impacting gold’s rally.
Gold surged to a five-day high above $2,400 on escalating Mideast tensions, then eased as Iran calmed anxieties. Prices hover around $2,394, buoyed by falling yields despite the Fed’s hawkish shift.
In a hawkish shift, Chicago Fed President Goolsbee joined the chorus on Friday, declaring inflation progress stalled and the current restrictive policy “on point.” This follows similar comments from Bostic and Williams, with Bostic, the FOMC’s resident hawk, going a step further by pledging no rate cuts until year-end.
Technical Outlook on the Gold Market (XAU/USD)
April commenced on a bullish note for the Gold (XAU/USD) market, which has since been consistently dominated by bullish sentiments. However, between last Wednesday and today, the market has experienced significant volatility, albeit maintaining its position around the $2,340 price level. The Relative Strength Index (RSI) has remained in the overbought region for the past three weeks, indicating robust buying momentum in the market.
Nevertheless, upon reaching the $2400 price level, a bearish sentiment emerged, accompanied by the formation of an inverted hammer candlestick. This occurrence at a key resistance level suggests a potential inclination toward market reversal. However, the robust support level around $2,340 appears capable of repelling bearish price movements.
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