GOLD Price Analysis – February 20, 2023

Daily Price Outlook

The gold price is trading at $1,844.38 and represents a 0.07% increase in the last 24 hours. Following North Korea's recent firing of two ballistic missiles towards Tokyo, both of which fell outside of Japan's Exclusive Economic Zone (EEZ), Japanese Prime Minister Fumio Kishida has called for an urgent meeting of the UN Security Council.

Geopolitical Tightrope: How Rising Tensions are Affecting Gold Prices in 2023

The recent meeting between US Secretary of State Antony Blinken and China's top diplomat Wang Yi failed to improve US-China relations, with Wang stating that the US needs to change direction and address the damage caused to Sino-US relations by the deployment of indiscriminate force.

Rising geopolitical tensions led to an increase in the safe-haven status of gold, causing its price to rise. However, the strengthening of the US dollar at the same time limited the rising trend for precious metals. The Dollar Index has benefited from increasing US-China tensions and North Korean projectile launches near Japan's Exclusive Economic Zone.

In addition, investors are becoming increasingly concerned about the higher-than-expected US Consumer Price Index (CPI), Producer Price Index (PPI), and monthly Retail Sales data. This has raised the risk of a rebound in inflationary pressures, which is why the US Dollar Index (DXY) has risen to over 103.92.

Gold Under Pressure: How the Fed's Hawkish Interest Rate Policies are Resh

The US economy has a significant impact on gold's volatility, especially in the event of a more aggressive Federal Reserve following stronger-than-expected economic data.

Several Fed officials have emphasized the need for a continued restrictive monetary policy environment, with some even predicting a 50bps interest rate hike in March. Although the market is anticipating a 25bps increase, new data supporting a robust US economy could lead to a more hawkish attitude.

On February 22, the Fed will release the minutes from its February meeting. As Core PCE is the Fed's preferred inflation metric, it will receive more attention if this number follows the CPI report.

Despite raising interest rates by a modest 25 basis points at its meeting, the central bank may continue its hawkish attitude. Increasing interest rates raise US Treasury yields, increasing the opportunity cost of holding non-yielding assets like gold.

Therefore, it's worth keeping an eye on the USD's reaction to the release of the FOMC meeting minutes later this week.

Gold (XAU/USD) Intraday Technical Levels

Support      Resistance

1846.15       1850.75

1844.55       1853.75

1841.55       1855.35

Pivot Point: 1850

Gold (XAU/USD) – Technical Outlook

From a technical standpoint, gold has formed a descending channel, which is presenting strong resistance near the $1,845 level, while support is present near $1,820.

On the 2-hour timeframe, the double top pattern is acting as a strong resistance near $1,845, and a breakout above this level would determine further upside for gold. In terms of immediate resistance, gold is currently facing levels of $1,860 or $1,870.

The RSI and MACD indicators are currently holding in a buying zone, indicating a bullish bias in the market. However, the continuation of the upside movement is dependent on whether or not gold can break through the $1,845 mark.

Alternatively, gold's immediate support level is near $1,830, and below this, $1,820 is likely to provide support for gold prices.