Gold Price Surge Amidst Geopolitical Tensions

Gold Price

Gold Price Comprehensive Analysis

In a remarkable display of resilience, the gold price has exhibited a consistent upward trajectory for the third consecutive day this Thursday. Geopolitical uncertainties remain a significant driving force behind the demand for the safe-haven asset, XAU/USD. However, this surge faces some constraints due to hawkish expectations from the Federal Reserve, rising US bond yields, and the strengthening US dollar.

The Gold Price Recent Surge

The value of gold (XAU/USD) experienced a robust upturn on Wednesday, propelling it to its highest point since early August, reaching the vicinity of $1,962-1,963. This surge was predominantly influenced by concerns over an escalation in the Middle East conflict. Nevertheless, the continuous rise in US Treasury bond yields, fueled by the belief that the Federal Reserve (Fed) will maintain high-interest rates for an extended period, has imposed limits on gains for the non-yielding precious metal. Additionally, an increase in demand for the US Dollar (USD) prompted some profit-taking at higher levels, resulting in a modest retracement.

The Retracement and Its Implications

The retracement, however, did not witness a sustained follow-through and halted its descent around the $1,938 area. Ongoing geopolitical tensions continue to direct funds toward safe havens. Enabling the gold price to remain in positive territory for the third consecutive day on Thursday. Despite this, the bullish camp appears somewhat cautious, refraining from making aggressive wagers, and instead choosing to wait on the sidelines in anticipation of Fed Chair Jerome Powell’s forthcoming address. Traders are eagerly awaiting fresh insights regarding the Fed’s future trajectory for interest rate hikes. Which will, in turn, shape the course of the USD and provide substantial momentum to XAU/USD.

Technical Analysis

From a technical perspective, the recent breakout above the 200-day Simple Moving Average (SMA) and the subsequent rally beyond the $1,947-1,948 supply zone signal a new catalyst for the bulls. Furthermore, indicators on the daily chart remain positively aligned and are comfortably distant from the overbought region. Consequently, this suggests that the most likely direction for the gold price is upward. However, it would be prudent to await further buying momentum beyond the previous peak from the overnight session. hich is approximately in the $1,962-1,963 range, before positioning for potential extended gains. XAU/USD may subsequently intensify its momentum, targeting the interim obstacle at $1,982. Before setting its sights on reclaiming the psychologically significant $2,000 threshold, a feat it hasn’t achieved since May.

Gold Price
XAUUSD Daily Chart

Potential Support Levels

On the contrary, if there is a decline beneath the $1,948-1,947 range. It is probable that strong support will be found near the 200-day SMA, currently situated around the $1,930 level. This level is closely followed by the 100-day SMA, positioned near the $1,922 region, before reaching the $1,930 support sector. Should the gold price decline further, it may test the $1,900 rounded benchmark. This juncture coincides with the 50-day SMA and is expected to serve as a robust foundation for XAU/USD. A clear breach beneath this level will negate the optimistic outlook and shift the short-term bias in favor of bearish traders.

Conclusion

The gold price continues to exhibit strength in the face of geopolitical uncertainties. Although challenges from the Federal Reserve’s stance, rising US bond yields, and a stronger US dollar remain. Traders are closely monitoring the situation and are particularly interested in the upcoming address by Fed Chair Jerome Powell. As it will likely provide further direction for XAU/USD. From a technical standpoint, the indicators are favorable for an upward trajectory. But caution is advised as the market navigates critical price levels and potential support zones.

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