GOLD Price Analysis – April 22, 2024
Daily Price Outlook
Gold price (XAU/USD) was unable to extend its previous week's bullish rally and turned bearish at the start of this news week, hitting an intraday low of 2,351.64 level. However, the reason for its downward trend can be attributed to improved market sentiment regarding the Iran-Israel conflict, reducing demand for safe-haven assets like gold. Additionally, expectations of lower Fed rate cuts have strengthened the US dollar, further putting pressure on gold prices.
Looking forward, traders seem hesitant to make strong positions as they closely monitor upcoming events such as the release of flash global PMI prints, the Advance US Q1 GDP report, and the US Personal Consumption Expenditures (PCE) Price Index. .
Iran-Israel Tensions Easing and Impact on Gold Prices
On the geopolitical front, the tensions between Iran and Israel have eased slightly despite recent attacks and retaliations. The US approved $13 billion in military aid for Israel, which Israel welcomed but Palestinians criticized as escalating violence. Iran downplayed reported Israeli retaliation, calling it minor, while violence persisted in Iraq, Gaza, and the West Bank. Despite ongoing conflicts and regional tensions, both Iran and Israel seem cautious about escalating into a broader war.
Hence, Iran's decision not to retaliate against Israel's limited-scale missile strike on Friday has eased fears of escalating tensions in the Middle East. This positive development has boosted investor confidence and contributed to the losses in safe-haven gold.
US Dollar Strength and Hawkish Fed Impact on Gold Prices
On the US front, the broad-based US dollar has been gaining momentum due to a hawkish Fed stance on rate cuts. This bullish US dollar is seen as another key factor keeping gold prices lower. People expect the Federal Reserve to maintain higher interest rates due to ongoing inflation, which is causing gold prices to decrease. Investors anticipate the first interest rate cut might happen in September, with fewer cuts expected in 2024. Chicago Fed President Austan Goolsbee prefers to wait and see how inflation develops before making policy changes.
On the flip side, concerns about the global economy slowing down have led people to believe that major central banks might lower interest rates together later this year. This could support gold prices by capping the gains in the US dollar.
GOLD (XAU/USD) - Technical Analysis
In today’s session, gold prices declined to $2,357.28, marking a decrease of 1.47%. The asset is currently trading below its daily pivot point of $2,378, which signals bearish momentum in the short term. This downturn reflects the trader’s response to the latest macroeconomic cues and market sentiment, with gold failing to maintain support levels indicated by the 50-Day Exponential Moving Average (EMA) at $2,370.
Gold faces immediate resistance at $2,402, with further ceilings awaiting at $2,432 and $2,462. These levels represent potential reversal zones where bullish traders might regain control. Conversely, immediate support is positioned at $2,348. If this level fails to hold, subsequent floors at $2,327 and $2,304 could come into play, likely serving as areas where buying interest could reemerge.
The Relative Strength Index (RSI) stands at 41, suggesting that gold is nearing oversold conditions but not there yet, which may limit immediate downward movements. The proximity of the current price to the 50 EMA also underscores a critical juncture; should prices sustain below $2,370, it could confirm a bearish outlook for the near term.
Given the bearish bias indicated by the break below the 50 EMA and pivotal support levels, traders might consider entering short positions below $2,370. The suggested take-profit level is set at $2,335 with a stop-loss at $2,393 to manage risk effectively.
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