Gold price is gaining momentum in the early Asian session on Tuesday, rebounding from two-week lows of $2,325. This uptick is supported by the weaker US Dollar and safe-haven flows due to ongoing geopolitical tensions in the Middle East. However, higher short-term Treasury yields following hawkish Fed minutes and strong US economic data may bolster the Greenback in the near term. Traders are awaiting key US inflation data this week, including the US CB Consumer Confidence report and speeches from Fed officials Neel Kashkari, Mary Daly and Lisa Cook. More hawkish comments from the Fed could lead to a shift in expectations regarding a potential rate cut, boosting the US Dollar and putting pressure on the gold price.
Global leaders are calling for the implementation of a World Court order to halt Israel’s attacks after an Israeli airstrike caused a fire that killed 45 people in a tent camp in Rafah, Gaza. The recent Fed meeting minutes suggest that the central bank may take longer to gain confidence in inflation reaching the 2% target. Traders have reduced their bets on a US Federal Reserve interest rate reduction in September, and the preliminary US GDP Annualized is estimated to grow by 1.4% in Q1. The US Core PCE Price Index is expected to show an increase of 0.3% MoM and 2.8% YoY in April. Analysts from UBS and Citi have raised their gold price projections, forecasting prices to reach $2,600 and $3,000 per ounce respectively.
Technically, the gold price remains positive in the long term, trading above the key 100-day EMA on the 1-hour chart. The RSI indicates a neutral level, suggesting a balance between bullish and bearish positions. The upper boundary of the Bollinger Band at $2,430 serves as an immediate resistance level, with potential targets at $2,450 and $2,500. On the downside, support levels lie at $2,300 and $2,268, followed by the 100-day EMA at $2,220.
The US Dollar weakened against major currencies, with the Swiss Franc being the strongest performer. Gold is often viewed as a hedge against inflation and depreciating currencies, making it an attractive investment during turbulent times. Central banks are the largest holders of Gold, adding 1,136 tonnes to their reserves in 2022. Gold has an inverse correlation with the US Dollar and US Treasuries, as well as risk assets. Geopolitical instability, recession fears, and interest rate movements can all impact the price of Gold, with the US Dollar playing a significant role due to Gold being priced in dollars.
Overall, the Gold price is influenced by a combination of factors including geopolitical tensions, economic data, central bank actions, and currency movements. Traders will continue to monitor key events and data releases to gauge the direction of the precious metal’s price in the coming days and weeks. With analysts raising price projections and ongoing uncertainties in the global economy, Gold could remain a key asset for investors seeking stability and protection against market volatility.