Technical Analysis

GOLD Price Analysis – March 07, 2024

By LonghornFX Technical Analysis
Mar 7, 20244 min

Daily Price Outlook

Gold price (XAU/USD) maintained its upward rally and hit the fresh all-time high of $2,160 level. However, the reason for its upward trend can be attributed to a combination of factors, including increasing expectations for an imminent interest rate cut later this year, which undermined the US dollar and contributed to the gold price gains. During semi-annual congressional testimony on Wednesday, Federal Reserve (Fed) Chair Jerome Powell reinforced expectations for an imminent interest rate cut later this year. Furthermore, the risk-off market sentiment, pressured by geopolitical tensions and concerns about a slowdown in China, was seen as another key factor that kept the gold price high due to its safe-haven status.

Federal Reserve's Potential Interest Rate Cuts Propel Gold to Record Highs

On the US front, the Federal Reserve, led by Chair Jerome Powell, is strongly considering lowering interest rates to boost the economy. This decision has weakened the US Dollar and made investors turn to Gold, driving its prices up to a fresh all-time high. However, the strong possibility, around 70%, of a rate cut occurring in June has caused the yields on US government bonds to drop to their lowest point in a month.

Meanwhile, Powell believes that if the economy continues on its current path, a rate cut later in the year is probable. Besides this, Minneapolis Fed President Neel Kashkari mentioned the possibility of two rate cuts in 2024, although he might change his mind depending on how well the economy is doing.

Therefore, the likelihood of a rate cut in June, along with persistent economic worries, has driven gold prices to unprecedented levels. Investors are seeking refuge in gold due to uncertainties, considering it a safe-haven asset amidst turbulent market conditions.

Escalating Tensions and Humanitarian Crisis Drive Gold Prices Up

Furthermore, the long-lasting tensions in the Middle East and concerns about China's economic slowdown are driving up the price of safe-haven gold. It is worth noting that the recent Houthi missile attack killed three crew members on a cargo ship near Yemen, raising fears of more conflict in the area. This comes after an Israeli airstrike in Gaza killed five people and reports emerged of severe malnutrition and dehydration affecting thousands in northern Gaza.

This highlight the urgent need for aid in the region. Shockingly, the UN reveals that one out of every six children under two years old in northern Gaza is suffering from severe malnutrition. This alarming statistic highlights the urgent need for immediate aid and intervention to address the worsening situation and prevent further suffering among the region's vulnerable population.

Therefore, tensions in the Middle East and worries about China's economy are pushing investors towards safe-haven assets like gold, causing its price to rise.

Looking forward, traders are keeping their eyes on the US Weekly Initial Jobless Claims data and US Non-Farm Payrolls (NFP) report on Friday. Meanwhile, Fed Chair Jerome Powell's second day of testimony for guidance will also be in the spotlight. These events influence market direction and provide insight into the state of the US economy.

Gold Price Chart - Source: Tradingview
Gold Price Chart - Source: Tradingview

GOLD (XAU/USD) - Technical Analysis

On March 7, Gold (XAU/USD) exhibited a commendable uptrend, marking a 0.47% increase to reach $2,158.25. This surge underscores a renewed investor interest in the precious metal as a hedge against potential market volatilities. The trading session highlighted significant movement beyond the pivot point of $2,146.02, suggesting a bullish sentiment in the market.

Key resistance levels for Gold have been identified at $2,168.25, $2,182.32, and $2,196.38, which represent critical junctures that could either propel or limit further gains. Conversely, support levels established at $2,127.87, $2,114.71, and $2,098.83 offer a safety net against potential declines, underpinning the asset's resilience.

Technical indicators further bolster this optimistic outlook, with the 50-Day Exponential Moving Average (EMA) at $2,042.37 and the 200-Day EMA at $1,982.27, both well below the current price, indicating sustained upward momentum.



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