Technical Analysis

GOLD Price Analysis – April 12, 2024

By LonghornFX Technical Analysis
Apr 12, 20244 min

Daily Price Outlook

Gold price (XAU/USD) has maintained its previous long upward trend and hit the new record highs amidst ongoing geopolitical tensions. However, the metal's strong performance is driven by several key factors including heightened concerns about geopolitical conflicts, especially in the Middle East, which have boosted demand for gold as a safe-haven asset. It should be noted that the possibility of Iranian retaliation following suspected strikes has fueled uncertainty in the market. This has led investors to buy gold to stay safe from market ups and downs. In addition to this, anticipations of major central banks, including the Federal Reserve, implementing interest rate cuts have also contributed to gold's bullish rally.

Despite a recent strength of the US Dollar, supported by reduced expectations of Fed rate cuts, gold's upward trajectory remains largely unaffected and flashing green signals amid several key factors.

Heightened Middle East Tensions and Impact on Gold Price

On the geopolitical front, escalating tensions in the Middle East have propelled gold prices to fresh all-time highs. Investors' anxiety over geopolitical instability has led to increased demand for gold, reinforcing its status as a traditional safe-haven asset during times of uncertainty. The uncertainty surrounding geopolitical developments in the region continues to be a significant driver of gold's price movement, as investors closely monitor the situation for any potential escalations that could further bolster demand for the precious metal.

Impact of US Producer Price Index and Fed Rate Cut Expectations on Gold Price

On the other side, the release of the cooler-than-expected US Producer Price Index has maintained hopes for an imminent interest rate cut by the Federal Reserve. This development has provided an additional boost to gold prices, as lower interest rates typically diminish the appeal of holding onto fiat currencies, further enhancing gold's attractiveness as a store of value.

Investors are closely tracking Fed rate cut expectations, with the current outlook suggesting a greater chance that the Fed may delay rate cuts until the September policy meeting, and fewer rate cuts anticipated for the year. These expectations, coupled with economic data releases like the Producer Price Index, continue to influence gold's upward trajectory.

FedWatch Tool and US Dollar's Impact on Gold Price

On the other side, the hawkish outlook reflected in the FedWatch tool, indicating a potential delay in rate cuts and higher US Treasury bond yields, has allowed the US Dollar to maintain strength near year-to-date highs. While a strong dollar can typically weigh on gold prices, the metal's safe-haven appeal and ongoing geopolitical concerns have outweighed the impact of currency movements, sustaining its bullish momentum.

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

GOLD (XAU/USD) - Technical Analysis

In today's analysis, we focus on the gold market, where prices have increased by 0.53%, reaching $2384.36. The market's movement occurs against a backdrop of shifting economic and geopolitical dynamics, suggesting a cautious yet optimistic sentiment among investors. Examining the technical landscape, key price levels and pivotal resistances provide crucial guidance for market participants.

Key price levels serve as navigational markers in the gold market's trajectory. The pivot point at $2364 serves as a critical equilibrium, while immediate resistance levels stand at $2398, $2466, and $2533. On the downside, support levels are observed at $2295, $2262, and $2194, offering stability during potential downturns.

Technical indicators provide further insights into market sentiment. The Relative Strength Index (RSI) currently stands at 63, signaling potential overbought conditions with room for further upside. Additionally, the 50-Day Exponential Moving Average (EMA) rests at 2365, supporting the prevailing bullish trend.

In conclusion, a cautious yet optimistic outlook is warranted for gold investors. Entry considerations above $2383, coupled with a take-profit target at $2412, provide strategic guidelines. Mitigating downside risks involves implementing a stop-loss strategy at $2363, ensuring prudent risk management in a dynamic market environment.

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