Technical Analysis

GOLD Price Analysis – April 18, 2024

By LonghornFX Technical Analysis
Apr 18, 20243 min

Daily Price Outlook

Gold prices (XAU/USD) have extended their winning streak, remaining well bid around the $2,382 level as investors choose safe-haven assets due to increasing economic uncertainty worldwide. Meanwhile, ongoing tensions in the Middle East are seen as another key factor boosting the safe-haven gold price. Investors typically turn to gold during times of uncertainty. Moreover, hawkish comments from Federal Reserve Chair Jerome Powell have contributed to the bullish sentiment surrounding gold.

Federal Reserve Policy and Its Impact on Gold Prices

On the US front, the stance of Federal Reserve (Fed) policymakers regarding interest rates played a major role in Gold’s price. It should be noted that Federal Reserve (Fed) policymakers remains cautious, indicating that interest rates will likely stay higher for an extended period until upcoming data shows sustainable inflation at the desired rate of 2%. Therefore, this cautious approach adds to the appeal of Gold, as uncertainties in the economic landscape lead investors to seek refuge in safe-haven assets.

At the same time, Federal Reserve Chair Jerome Powell's recent comments on maintaining higher interest rates until inflation eases to 2% have bolstered the US dollar and bond yields. Therefore, the stronger US dollar exerts downward pressure on gold prices, as it becomes more expensive for investors holding other currencies to purchase gold.

Geopolitical Tensions Drive Gold Price Surge

On the geopolitical front, the long-lasting conflict in the Middle East have further bolstered the upticks in the safe-haven gold price. The recent attack by Iran on Israel and the threat of retaliatory measures have increased geopolitical risks, leading investors to seek refuge in assets considered safe, like gold.

However, the statements from key figures like Israel’s Prime Minister Benjamin Netanyahu, highlighting readiness to defend against threats, have further fueled these concerns. Consequently, investors turn to Gold as a traditional safe haven, driving up its price.

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

GOLD (XAU/USD) - Technical Analysis

Today’s trading session sees gold prices ascend to $2378.195, marking a 0.77% increase, reflecting a buoyant mood among investors. Gold continues to rally amidst an environment that favors safe-haven assets, with its current price navigating near the critical pivot point of $2413.

Resistance and Support Levels: Gold's immediate resistance lies at $2398, with further ceilings expected at $2432 and $2462. These thresholds represent potential turning points where sellers might regain control. Conversely, support levels are established at $2334, $2304, and $2277. A breach below these could signal a bearish turn, leading to further declines.

Technical Indicators: The Relative Strength Index (RSI) stands at 53, indicating a neutral market momentum with potential room for price increases if investor sentiment continues to improve. The 50-day Exponential Moving Average (EMA) at $2361 further supports the current bullish trend, suggesting that gold prices are well-positioned above this critical moving average, which historically acts as a dynamic support level.

Strategic Trading Levels: For traders considering entry into the market, buying above the $2370 mark could be strategic, targeting a take profit level at $2395. It's advisable to place a stop loss at $2345 to mitigate potential losses should the market retract against bullish predictions.

Conclusion: The outlook for gold remains cautiously optimistic as it flirts with resistance levels that could define the next trading phase. Traders should monitor these levels closely, as a breakout above $2398 could confirm continued bullish momentum, while failure to hold support might reverse gains.

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