GOLD Price Analysis – Jan 29, 2024
Daily Price Outlook
Gold price (XAU/USD) prolonged its upward trend and remained well bid around the $2,026 level. However, the reason for its upward trend can be attributed to the escalating geopolitical tensions in the Middle East, which tend to underpin safe-haven assets, including gold. In the meantime, the sliding US bond yields were seen as another key factor that kept the gold price higher.
Moving on, traders seem hesitant to place any strong positions as they prefer to wait for more cues about the timing of when the Federal Reserve (Fed) will start cutting interest rates. Therefore, the investor's focus will be on the outcome of the highly-anticipated two-day FOMC monetary policy meeting starting on Tuesday.
Escalating Tensions in the Middle East: Impact on Investor Sentiment and Gold Prices
The global market sentiment has been flashing red as three US Army soldiers were killed in a drone attack by Iran-backed militant groups, stirring concerns about heightened tensions in the Middle East. The incident occurred in Jordan, marking the first US service personnel deaths since the Hamas-Israel war began on October 7. President Joe Biden has affirmed the commitment to retaliate, vowing to hold those responsible to account. However, this situation is impacting investor sentiment, leading to increased support for the safe-haven Gold price at the start of the week.
Therefore, the news of three US Army soldiers killed in a drone attack by Iran-backed militants heightened concerns, impacting investor sentiment and leading to increased support for the safe-haven Gold price.
Cautious Sentiment and Fed Outlook Impacting Gold and USD
In contrast to this, the probability of the Federal Reserve implementing aggressive policy measures eased, seen as a key factor giving a boost to the US Dollar (USD) and capping further gains in the gold price. It should be noted that the broad-based US dollar is holding steady near a one-month high, reflecting investors' adjusted expectations for a more gradual Fed easing. Recent data reveals a modest increase in December inflation, aligning with expectations of Fed interest rate cuts by mid-2024. Despite some economic indicators signaling strength, lower US Treasury bond yields are capping further USD gains, favoring Gold.
GOLD (XAU/USD) - Technical Analysis
Gold's technical landscape on January 26 exhibits a tempered advance, with the metal trading at $2,022.105, marking a modest 0.06% gain. Positioned just above a pivot point at $2,002.57, gold's immediate trajectory is clouded with a balanced mix of caution and opportunism. Resistance levels loom overhead, with $2,031.38 as the nearest hurdle, followed by $2,057.88 and $2,087.83, each potentially capping upward surges.
Conversely, supports at $1,973.77, $1,944.96, and $1,916.15 stand as bulwarks against a decline, ready to catch falling prices. The RSI, neutral at 49, and the MACD, with a mainline at 0.04 above its signal, provide no clear directional bias, underscoring a market in equilibrium.
A symmetrical triangle pattern hints at consolidation, suggesting that gold prices are coiling for a breakout that could define the next significant move. In the interim, the strategy points to a cautious buy stop at $2,027, targeting profits at $2,040, and safeguarding with a stop loss at $2,016. The immediate forecast contemplates a challenge to the resistance at $2,031.38, with a close eye on supportive floors that may come into play on any potential pullback.
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