gold prices have reached an eight-day high, surpassing the $2,650 level in early Asian trading on Thursday. This uptick underscores a potential weekly rebound as tensions in the geopolitical landscape, particularly between Russia and Ukraine, bolster demand for gold as a safe-haven asset. Traders are closely monitoring upcoming speeches from various US Federal Reserve officials, particularly in the absence of significant US economic data releases.
The recent surge in gold prices may be attributed to a slight decline in the US dollar and US Treasury bond yields. Following a substantial rally for the dollar on Wednesday, driven by rising bond yields and heightened optimism surrounding economic policies, gold has managed to extend its recovery for a fourth consecutive session. Despite hawkish signals from several Fed officials, market sentiment leans toward favoring gold as geopolitical tensions intensify.
As discussions continue among Fed policymakers regarding potential interest rate cuts, the expectation for a 25 basis point reduction in December has diminished, falling from 83% a week ago to 52%. While some officials advocate a cautious approach to monetary policy, others highlight a need for more rate cuts, suggesting uncertainty in the central bank’s future actions. This divergence in opinions may contribute to the overall volatility in gold prices.
gold is likely to receive ongoing support from geopolitical uncertainties, particularly following Russia’s recent maneuvers, including accusations of misinformation targeting Ukraine. The tension escalated after the US allowed Ukraine to use American-made missiles in its conflict with Russia, resulting in heightened risks of escalation.
In terms of technical analysis, the near-term outlook appears favorable for gold , with the Relative Strength Index (RSI) moving into a positive territory. However, traders should be cautious of a potential Bear Cross formation, as the 21-day Moving Average nears the 50-day Moving Average, posing a risk of bearish momentum. For sustained growth, gold prices need to maintain a position above the $2,660 level, with objectives set at $2,680 and $2,700. Conversely, if gold fails to hold above this threshold, a drop to $2,600 may be anticipated.
