Gold Bounces Off MAs As Tensions and Metals Demand Increases

Last week, the outlook for commodities turned negative, with significant declines in the silver and gold prices, but this week buyers are back. Although there was a significant decline following one of the greatest rallies in recent memory, which saw gold prices reach all-time highs of $2.450, there is now renewed interest in commodities.

Early last week, gold (XAU/USD) surged to a recent record high of $2,450. However, the precious metal reversed direction and declined during the second half of the week, reaching lows of $2,325. Currently, the XAU/USD pair is trading around $2,350, representing a 1.50% increase from last week’s low.

Gold Chart H4 – The 100 SMA Held As Support

The renewed demand for safe havens, driven by escalating tensions in the Middle East following the attack on Rafah, has contributed to the recent support for gold and silver. Additionally, this upward movement in precious metals coincides with a broader bullish trend in the commodities market, as seen with copper rebounding after last week’s decline.

Demand for Commodities and Metals Is Up Too

This suggests that the rise in gold and other metals is not solely driven by geopolitical factors but is also part of a more generalized positive sentiment in the commodities market. The recovery in copper, alongside gains in GOLD and SILVER , underscores a broad-based bullish move in metals. Investors appear to be seeking refuge in these assets amidst the current geopolitical uncertainties, reaffirming their roles as safe havens and hedges against volatility.

The Federal Reserve’s stance on interest rates has had a significant impact on gold prices. Last week, the Fed’s potential reduction in interest rate cuts and hawkish remarks from its officials may have contributed to increased selling pressure on gold. Higher interest rates tend to make gold less attractive as a store of value because they increase the opportunity cost of holding non-yielding assets like gold.

However, geopolitical tensions, particularly in the Middle East, have provided strong support for gold as a safe-haven asset. The recent Israeli airstrikes in Rafah, resulting in substantial casualties, have escalated the demand for assets perceived as safe havens. However, the jump in the gold price has stalled at the 100 SMA (green), where we decided to open a sell Gold signal, targeting the red moving average at the bottom.

Gold Live Chart