Technical Analysis

GOLD Price Analysis – April 29, 2024

By LonghornFX Technical Analysis
Apr 29, 20244 min

Daily Price Outlook

Despite the Federal Reserve (Fed) delaying interest rate cuts due to persistent inflation, the Gold price (XAU/USD) continued its upward trend, remaining well bid around $2,342 and hitting an intra-day high of $2,344.39. The rise in gold prices can be attributed to the weakening US dollar, which failed to gain traction despite the Fed's hawkish stance amid a risk-on market sentiment. In the meantime, the losses in the US dollar were further bolstered by the strong rally in the Japanese Yen (JPY). Moreover, the ongoing geopolitical tensions regarding the Russia-Ukraine war and the Israel-Hamas conflict were seen as another key factor that kept the safe-haven gold price higher.

US Dollar Weakness and Fed's Hawkish Stance Fuel Gold Price Surge

Despite the Federal Reserve's hawkish stance on interest rates, the broad-based US dollar is losing traction and still flashing red amid positive market sentiment. Hence, the bearish trend in dollar helping the gold prices to stay bid. Investors are paying close attention to the Federal Reserve's upcoming decision on interest rates. They expect the Fed to keep rates steady between 5.25% and 5.5%. The US economy is strong, but rising inflation has led to speculation that rate cuts might not occur until September.

On the data front, the US Bureau of Economic Analysis reported on Friday that the Personal Consumption Expenditures (PCE) Price Index rose 0.3% in March, exceeding expectations for a reading of 2.6%. The yearly rate also climbed to 2.7% from 2.5% in February. Meanwhile, the core PCE Price Index, which excludes volatile food and energy prices, remained steady at 2.8%, higher than the anticipated 2.6%. These results reinforced the Federal Reserve's hawkish expectations and put pressure on the non-yielding Gold price.

Therefore, the weakening US dollar, coupled with reinforced expectations of a hawkish Federal Reserve due to rising inflation, has contributed to upward pressure on gold prices despite the absence of yield.

Geopolitical Tensions Drive Safe-Haven Appeal for Gold

On the geopolitical front, the ongoing tensions from the Russia-Ukraine conflict and Israel-Hamas disputes are main factors boosting gold's safe-haven appeal. As per the latest report, Ukraine's attacks on Russian oil refineries and its plea for increased US military aid due to escalating frontline conditions, increased geopolitical risks, supporting the gold price.

Despite talks by Hamas officials in Egypt for a ceasefire, Israel has approved continued military action. However, the casualties on both sides highlight the conflict's toll, with over 34,000 Palestinians and over 1,100 Israelis reported dead since October 7. This situation has created uncertainty, potentially driving up the demand for gold as a safe-haven investment.

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

GOLD (XAU/USD) - Technical Analysis

Gold prices experienced a slight downturn today, trading at $2,333.435, a decrease of 0.20%. The 4-hour chart reveals a technical landscape where the metal is currently fluctuating around a pivotal point of $2,320.43. The market's direction appears to hinge on the ability of gold to sustain levels above this pivot, which could set the stage for an upward movement toward the immediate resistance at $2,353.05.

If gold successfully breaches this first resistance, subsequent targets lie at $2,373.72 and $2,401.28, suggesting potential for a more significant rally if bullish momentum gathers pace. Conversely, should gold falter and drop below the pivot point, it may seek support at lower levels of $2,290.91, followed by $2,268.21 and $2,244.57, which would indicate a strengthening bearish sentiment.

Current technical indicators provide a mixed outlook; the Relative Strength Index (RSI) is at 51, signaling a relatively neutral market sentiment, neither overbought nor oversold. The 50-Day Exponential Moving Average (EMA) at $2,326.43 sits just above the pivot, underscoring a tentative bullish inclination in the near term.

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