Technical Analysis

GOLD Price Analysis – April 17, 2024

By LonghornFX Technical Analysis
Apr 17, 20243 min

Daily Price Outlook

Gold price (XAU/USD) has maintained its upward trend and hit all-time highs around the $2,392 level as investors turned to safe-haven assets like gold amidst economic uncertainty. Meanwhile, the ongoing tensions in the Middle East, coupled with mixed economic data and hawkish comments from Federal Reserve Chair Jerome Powell, have contributed to the bullish sentiment surrounding gold. Investors traditionally turn to gold during times of uncertainty and market volatility. Meanwhile, geopolitical tensions and concerns about inflation have fueled demand for the precious metal, pushing prices upwards.

Fed Chair Powell's Hawkish Stance and Mixed US Data: Impact on Gold

On the US front, the Federal Reserve Chair Jerome Powell's recent comments on maintaining higher interest rates until inflation eases to 2% have bolstered the US dollar and bond yields. However, this hawkish stance, combined with strong labor demand and mixed economic data, has created a more bullish environment for the US dollar. Therefore, the stronger US dollar typically exerts downward pressure on gold prices, as it becomes more expensive for investors holding other currencies to purchase gold.

Powell's comments and mixed US data have caused gold to struggle in maintaining its new all-time highs. Although geopolitical tensions offer some support, overall sentiment is cautious due to the Fed's restrictive policy framework.

Escalating Middle East Tensions and Gold's Safe-Haven Appeal

On the geopolitical front, the escalating tensions in the Middle East, particularly between Israel and Iran, have added to the safe-haven appeal of gold. However, the recent attack by Iran on Israel and the threat of retaliatory measures have heightened geopolitical risks, prompting investors to seek refuge in assets perceived as safe, such as gold.

According to recent reports, an Israeli air attack in Gaza destroyed a mosque and nearby homes, causing injuries to many, including children and women. Iran warned Israel of a strong response to any action against its missile attacks. Israel is urging 32 countries to impose sanctions on Iran's military and missile program.

Israeli settlers are causing violence in the West Bank, and more troops are deployed. Over 33,843 Palestinians have died, and 76,575 are wounded in Gaza from Israeli attacks since October 7.

GOLD Price Chart - Source: Tradingview
GOLD Price Chart - Source: Tradingview

GOLD (XAU/USD) - Technical Analysis

On April 17, gold prices observed a slight decline, settling at $2,377.20, down 0.31% from the previous trading session. The precious metal is currently trading below its pivot point of $2,389, signaling a cautious sentiment among investors. Technical resistance levels are set at $2,410, $2,432, and $2,454, which gold would need to surpass to regain a bullish stance. However, immediate support levels loom at $2,334, followed by $2,305 and $2,277, which could come into play if downward pressure continues.

The Relative Strength Index (RSI) stands at 54, indicating a neutral market momentum, neither overbought nor oversold at this juncture. Meanwhile, the 50-day Exponential Moving Average (EMA) at $2,352 supports the notion of a medium-term upward trend in gold prices. This is reinforced by the positioning of the 200 EMA, suggesting a sustained bullish sentiment over a longer period.

Given the current market setup, traders might consider a strategic approach: entering a sell position if gold prices fall below $2,390, aiming for a take profit at around $2,350, with a stop loss set at $2,410.

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