GOLD Price Analysis – Sep 20, 2024
Daily Price Outlook
Gold (XAU/USD) maintained its upward trend and recently soared to a record high of nearly $2,610, driven by rising expectations that central banks around the world will follow the Federal Reserve's lead in easing monetary policy and cutting interest rates. Lower interest rates tend to make gold more attractive, encouraging more investors to jump in.
At the same time, escalating geopolitical tensions are bolstering gold’s reputation as a safe haven. Recent reports of Israel using advanced technology to target Hezbollah agents in Lebanon have raised fears of further conflict in the Middle East.
This uncertainty is prompting many to turn to gold as a reliable store of value, highlighting its enduring appeal in times of crisis.
Global Interest Rate Cuts and Geopolitical Tensions Drive Gold Prices Higher
Following Wednesday’s Federal Reserve decision, several global central banks moved to cut interest rates.
The South African Reserve Bank (SARB) reduced its key rate by 25 basis points on Thursday, its first cut since the COVID-19 pandemic. The Central Bank of the Philippines made a much larger cut of 250 basis points, bringing its rate to 7.0%.
Meanwhile, the Reserve Bank of India (RBI) is expected to follow suit with rate cuts at its next meeting.
In China, the People’s Bank of China (PboC) kept rates unchanged on Friday, but both the one-year and five-year loan prime rates remain at record lows after a surprise cut in July. The Bank of Japan (BoJ) left rates unchanged, despite earlier speculation of a potential hike.
Gold prices have been rising due to a combination of factors, including the Fed's rate cuts, which make holding gold more attractive as it reduces the opportunity cost of investing in non-yielding assets.
Additionally, heightened geopolitical tensions, particularly in the Middle East, have increased demand for gold as a safe haven.
The recent conflict escalations have driven investors toward gold, seeking stability amidst uncertainty.
While the Fed's optimistic outlook for US growth might have initially capped gains, the overall environment of lower rates and geopolitical risk has propelled gold to new highs.
GOLD (XAU/USD) - Technical Analysis
Gold (XAU/USD) is currently trading at $2,593.96, up 0.25%, as it hovers near the psychological level of $2,600. With the price approaching key technical levels, the metal remains bullish in the short term. The pivot point at $2,600 serves as a critical juncture.
Immediate resistance is seen just above at $2,600.32, with further upside targets at $2,609.07 and $2,619.51. Should prices break above these levels, gold could see an extended rally, driven by positive momentum.
On the downside, immediate support is positioned at $2,577.27, followed by $2,564.14 and $2,551.52. The 50-day Exponential Moving Average (EMA) at $2,578.06 is acting as a strong support level, ensuring the bullish bias remains intact unless broken.
The Relative Strength Index (RSI) stands at 63, signaling upward momentum but nearing overbought conditions, which could prompt a short-term pullback or consolidation around current levels.
A sustained break above $2,600 would confirm the continuation of the uptrend, while a fall below $2,577 could introduce selling pressure and test lower support levels.
Gold’s technical outlook remains favorable as long as the price holds above $2,578.06. Traders may want to keep an eye on broader economic data, particularly inflation figures, which could further support gold's appeal as a safe-haven asset amid ongoing market uncertainties.
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