Technical Analysis

GOLD Price Analysis – April 03, 2024

By LonghornFX Technical Analysis
Apr 3, 20244 min

Daily Price Outlook

Gold prices (XAU/USD) have maintained their upward trend and hit new all-time highs around 2,288 level. However, this bullish trend was driven by a combination of factors, including rising geopolitical tensions globally. It should be noted that the ongoing conflict in the Middle East, particularly tensions related to the Russia-Ukraine war, has heightened uncertainty in the market, which was seen as one of the key factor that helped the safe-haven assets like gold to gains traction.

Moreover, the modest decline in the value of the US Dollar has helped boost gold prices. However, the declines in the dollar were bolstered by the Federal Reserve's reduced likelihood of cutting interest rates and investors' expectations of fewer rate cuts in the future. This overall trend of a weaker dollar makes gold more appealing and leads to higher prices for the precious metal.

Furthermore, the recent US economic data releases have also impacted the gold prices positively. On the data front, the released reports indicating growth in the US manufacturing sector, strong demand for labor, and increased orders for manufactured goods, which have boosted investor confidence. However, these upbeat economic signs are dampened by worries regarding how the Federal Reserve handles monetary policy.

Rising Geopolitical Tensions in the Middle East and Gold Price Impact

On the geopolitical front, the long-lasting tensions in the Middle East, particularly recent escalations such as Israeli strikes on Iran's embassy in Syria, have bolstered the safe-haven status of gold. In the meantime, the ongoing Russia-Ukraine conflict has also contributed to the overall geopolitical uncertainty, further boosting demand for gold.

Therefore, the impact of rising geopolitical tensions in the Middle East on gold prices has been evident in the recent surge to record highs. Investors closely monitor developments in the region, as any escalation could further support gold's safe-haven appeal and contribute to continued upward pressure on prices.

Weaker USD, Fed's Less Dovish Remarks, and US Data Impact on Gold Price

On the US front, the bearish US dollar has been a key driver behind the strength of gold prices as it makes gold more attractive to international investors and can lead to increased demand for the precious metal. However, the dollar's decline has been influenced by various factors, including the Federal Reserve's less dovish remarks and reduced expectations of interest rate cuts.

It is worth noting that Fed officials' comments indicating a gradual approach to monetary policy and a focus on inflation have tempered market expectations of aggressive rate cuts. This stance has bolstered the dollar while curbing its potential gains, thereby offering continued backing to gold prices.

Furthermore, positive US economic data releases, such as growth in the manufacturing sector, strong labor demand, and rebounding orders for manufactured goods, have boosted investor confidence. However, concerns about inflation and the Fed's cautious stance on rate cuts have kept gold prices higher.

GOLD Price Chart - Source: Tradingview
GOLD Price Chart - Source: Tradingview

GOLD (XAU/USD) - Technical Analysis

Gold's trading session on April 3 saw a slight increase, with the price moving up 0.15% to $2,268.23. The market's attention is fixated on the pivotal $2,285.97, serving as the immediate fulcrum for price movements. Resistance levels are staged at $2,302.73, $2,314.96, and $2,332.15, indicating potential ceilings for upward trends. Conversely, support is found at $2,261.84, with further cushions at $2,244.48 and $2,228.81, outlining possible floors for pullbacks.

The Relative Strength Index (RSI) stands at 57, suggesting a neutral to slightly bullish sentiment among traders. The 50-day Exponential Moving Average (EMA) at $2,235.75 adds a layer of technical support, bolstering the gold market's resilience. However, the technical landscape hints at caution: a doji candle formation and the closing of bearish engulfing patterns below the $2,285 level could precipitate a selling trend.

Investors are advised to consider a strategic approach: selling below $2,286 could be prudent, targeting a take-profit level at $2,260, while placing a stop-loss order at $2,305. This cautious strategy reflects the nuanced interplay of support and resistance levels, RSI readings, and candlestick patterns, underpinning the overall technical perspective for gold.

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