Gold Price Analysis – Feb 22, 2024

Daily Price Outlook

Despite the current risk-off market sentiment, gold continues to climb and drawing bids around the $2,033 mark. However, this uptick was fueled by concerns over conflicts in the Middle East, which forced investors to turn into gold as a safe-haven asset amid this uncertainty. Additionally, the recent decline in the US dollar is further supporting gold prices as the weaker dollar makes gold more attractive. It should be noted that the dollar is trending lower as traders await various business activity surveys to assess the global economic health.

US Monetary Policy & Its Impact on Gold

Despite the Fed's plan to keep interest rates higher for longer, the broad-based US dollar failed to to gain ground and remained under pressure around 103.475 marks. This renewed weakness in the dollar helped support the price of gold, The Fed wants to be more certain that inflation is going down before it thinks about cutting rates, which keeps the expectation for higher rates intact. As a result, the yield on US Treasury bonds rose, limiting gold's gains.

Geopolitical Tensions Drive Gold Prices Amid Middle East Unrest and Russia-Ukraine Conflict

In addition to this, the geopolitical tensions in the Middle East are boosting gold prices. Recent attacks by Yemen's Houthi rebels on commercial ships in the Red Sea and Bab al-Mandab strait have raised concerns about more conflict, increasing demand for gold. The US Central Command reported that the Houthis, backed by Iran, fired anti-ship ballistic missiles. Also, the conflict between Israel and Hamas in Gaza has intensified, with Israel considering a ground invasion. These events have increased geopolitical uncertainties, supporting gold prices despite the Federal Reserve's hawkish stance.

Thus, the current tensions in the Middle East are generally seen as positive for gold. Gold is often considered a safe-haven asset during times of geopolitical instability.

Gold - Technical Analysis

In the recent trading session, gold has exhibited a modest upward trajectory, with its price inching up by 0.11% to stand at $2028.165. This increment, although slight, underscores the intrinsic value investors continue to place in gold as a safe-haven asset amidst fluctuating market conditions. The 4-hour chart reveals a nuanced but palpable optimism, as gold navigates through economic uncertainties and shifts in global monetary policies.

The technical framework for gold is currently anchored around a pivot point at $2023.361, offering a lens through which to view potential price movements. Resistance levels at $2038.689, $2053.285, and $2065.708 delineate the thresholds that could challenge bullish momentum. Conversely, support levels established at $2013.200, $1999.912, and $1988.187 serve as critical junctures, potentially bolstering gold's price in the face of downward pressures.

The Relative Strength Index (RSI), positioned at 60, indicates a bullish momentum without venturing into overbought territory, suggesting that there's room for further upward movement. The 50-day Exponential Moving Average (EMA) at $2019.265 further validates this bullish sentiment, as the current price level comfortably exceeds this average, reinforcing the strength of the ongoing trend.

Given the alignment between the observed technical indicators and the key price levels, the outlook for gold appears cautiously optimistic. Investors might consider a strategic approach by initiating buy positions above $2023, with an eye towards a take profit level at $2038, while setting a stop loss at $2015. This approach not only capitalizes on the potential for further gains but also prudently manages risk, reflecting a balanced response to the prevailing market dynamics.