GOLD Price Analysis – April 16, 2024
Daily Price Outlook
Gold prices (XAU/USD) maintained their upward trend and remained well-bid around the $2,390 level. This upward trend can be attributed to the worsening Middle East crisis, which weighs on investors’ sentiment and benefits the metal. On the other hand, the reduced expectations of a Federal Reserve interest rate cut boosted the US dollar to its highest level so far this year, which limited the gains for the gold price. The broad-based US dollar hit to its highest level since early November due to expectations that the Federal Reserve (Fed) will delay cutting interest rates amid sticky inflation. This was seen as one of the key factor that kept the lid on any additional gains in the gold price.
Moving ahead, traders are keeping their eyes on US economic docket, which features the release of housing market data and Industrial Production figures. These, along with Fed's statements, will also be in spotlight.
Impact of Strong US Dollar and Retail Sales Data on Gold Prices
On the US front, the broad-based US dollar has been strengthening, reaching over a five-month peak due to ongoing concerns about the Middle East crisis and expectations that the Federal Reserve will maintain higher interest rates for a longer period. This has acted as a negative factor for the price of gold. Investors are delaying their predictions for the first Fed interest rate cut, now expecting it in September instead of June, due to worries about persistent inflation and a robust US economy.
On the data front, the release of upbeat US Retail Sales data for March has also impacted the gold price. On the data front, the US Census Bureau reported that Retail Sales increased by 0.7% month-on-month (MoM) in March. This surpassed expectations, which predicted a 0.3% rise, and also exceeded the previous month's growth of 0.9%, which was revised upward. The data, indicating a stronger-than-expected increase in retail sales, showed robust consumer spending and suggests support for inflation in the coming months.
Therefore, the robust US dollar is exerting downward pressure on gold prices, driven by concerns such as the Middle East crisis and expectations of prolonged higher interest rates by the Federal Reserve.
Impact of Middle East Geopolitical Tensions on Gold Prices
On the geopolitical front, Iran's attack on Israel over the weekend heightened tensions in the Middle East, increasing the risk of further conflicts. This situation benefited safe-haven assets like Gold, which saw a positive boost at the start of the new week. Israeli officials are considering retaliation, but the US made it clear that it won't join any offensive actions against Iran. As per the latest report, Iran fired over 300 projectiles at Israel in retaliation for an earlier strike. Israel hasn't responded yet, but tensions are high as both sides warn of stronger actions.
Therefore, the heightened tensions in the Middle East following Iran's attack on Israel led to a positive boost in the Gold price as investors sought safe-haven assets amid geopolitical uncertainty.
GOLD (XAU/USD) - Technical Analysis
In today's technical outlook for GOLD on April 16th, the precious metal experienced a decline, reaching $2371.99, marking a decrease of 0.58%. Analyzing the chart timeframe, the pivot point is established at $2351, indicating a pivotal level for potential price movements. Immediate resistance levels are observed at $2410, followed by $2432 and $2454. Conversely, immediate support lies at $2334, with subsequent levels at $2305 and $2277.
Technical indicators highlight the significance of the 50-day Exponential Moving Average, currently at $2341. Notably, a double top pattern is forming, exerting resistance around $2389. This pattern, coupled with the presence of a doji candle below this level, suggests a potential shift towards a selling trend.
In conclusion, traders may consider a sell strategy below $2389, with a take-profit target at $2350 and a stop-loss set at $2410. These key price levels and technical insights provide valuable guidance for navigating gold's current market dynamics.
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