Gold Prices Rally Amid Weakening Dollar and Heightened Geopolitical Tensions
Gold prices (XAU/USD) are on track for a sixth consecutive session of gains as factors such as a softer US Dollar and ongoing geopolitical conflicts bolster the precious metal market.
NEWS
3/13/20242 min read
Gold Prices Rally Amid Weakening Dollar and Heightened Geopolitical Tensions
Gold prices (XAU/USD) are on track for a sixth consecutive session of gains as factors such as a softer US Dollar and ongoing geopolitical conflicts bolster the precious metal market.
Ongoing tensions in regions like Ukraine and Gaza continue to provide support to gold, reaffirming its status as a safe-haven asset. Despite the expectation of sustained high borrowing costs, gold remains well-supported, with investors acknowledging the potential for interest rates to remain elevated for a prolonged period.
The recent release of minutes from the Federal Reserve's January meeting revealed the central bank's concern regarding the risks of premature rate cuts, prioritizing the containment of inflation. While higher interest rates typically pose challenges for non-yielding assets like gold, market sentiment remains convinced of impending rate cuts by the Fed and similar actions by other major economies.
Gold is expected to find continued support as long as these expectations persist, even amidst strong gains in riskier assets such as stocks. Goldman Sachs has forecasted price increases for gold in response to anticipated Fed rate cuts, along with other commodities like copper and oil.
Looking ahead, upcoming data releases, including US Purchasing Managers Index figures and Germany's final fourth-quarter economic growth report, could influence monetary policy expectations and consequently impact gold prices.
Gold Prices Technical Analysis
Currently trading near a ten-day high just below $2035/ounce, gold bulls aim to reclaim the $2035-$2037 resistance zone from earlier in February to establish a foundation for further upward momentum. Despite a broad trading range between $1982.34 and $2078.62 since late November, gold prices remain supported above the third Fibonacci retracement level at $1976.84.
Maintaining levels above the 100-day moving average around $2000 suggests continued bullish momentum, with potential tests of this level likely if the current rally persists. Overall, the multitude of fundamental factors at play suggests that the broad trading range is likely to hold in the near term.