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Gold Price Forecast: Safe-Haven Demand Pushes Prices to $2,370 Amid Middle East Tensions
Arslan Butt•Thursday, April 18, 2024•2 min read
Gold prices are showing signs of resilience, currently positioned at approximately $2,370 per troy ounce during Thursday’s Asian trading session. The precious metal is gaining traction as a safe-haven asset due to increasing geopolitical tensions in the Middle East.
Escalating Regional Tensions Enhance Gold’s Appeal
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Recent statements by Jordan’s Foreign Minister, Ayman Safadi, highlight the grave implications of escalating conflicts. Israeli military actions against Hezbollah in Lebanon further stoke fears of a wider regional conflict, boosting the traditional refuge status of gold.
The weakening of the US Dollar Index (DXY), which has slipped in response to subdued US Treasury yields, renders gold a more attractive investment for holders of other currencies. This decrease enhances gold’s affordability internationally, amplifying its appeal during times of dollar weakness.
Impact of U.S. Federal Reserve Policies
Comments from Federal Reserve Bank of Cleveland President Loretta Mester on Wednesday underscore the persistence of high inflation, currently running ahead of the Fed’s 2% target.
The Fed’s Chair, Jerome Powell, also indicated a potential delay in easing monetary policies due to inflationary pressures, suggesting that high-interest rates may persist. High rates typically diminish gold’s allure as they increase the opportunity cost of holding non-yielding assets.
Key Economic Indicators to Watch
The gold market also eyes key upcoming U.S. economic data points:
- Unemployment Claims have slightly increased to 215K from 211K.
- The Philly Fed Manufacturing Index is expected to decrease to 1.5 from 3.2.
- Remarks from FOMC members, including Bowman and Williams, could provide further insight into the Fed’s rate trajectory.
- Additional indicators include Existing Home Sales, projected at 4.20M down from 4.38M, and the Consumer Board Leading Index expected to show a minor contraction to -0.1% from 0.1%.
These indicators will likely influence gold’s short-term price movements by affecting market sentiment and monetary policy expectations.
As investors navigate through these uncertain times, the interplay between geopolitical developments and monetary policies will be critical in shaping the XAU/USD trajectory.
Gold Price Forecast: Technical Outlook
GOLD is currently trading at $2,377.065, marking an increase of 0.62%. The metal is trading above its pivot point at $2,358.59, indicating a bullish stance in today’s market.
Resistance levels are set at $2,400.53, followed by $2,418.52 and $2,435.38. Support levels are positioned at $2,334.98, $2,320.40, and $2,303.59.
Technical analysis shows the Relative Strength Index (RSI) at 53, supporting a moderate upward momentum. The 50-day Exponential Moving Average (EMA) at $2,352.89 further confirms the bullish trend, as gold prices are forming an upward channel and consistently posting bullish candles above this moving average.
Conclusion:
Gold maintains a bullish outlook above its pivot point of $2,358.59. However, any decline below this critical level could trigger a significant downtrend, inviting a potential sell-off.
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ABOUT THE AUTHOR
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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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