ST-37 City, Mwali, Fomboni Moheli Comoros Union.
ST-37 City, Mwali, Fomboni Moheli Comoros Union.
Apr 16
2024
Gold price oscillates in a narrow band on Tuesday and remains close to the all-time peak. The worsening Middle East crisis weighs on investors’ sentiment and benefits the metal. Reduced Fed rate cut bets lift the USD to a fresh YTD top and cap gains for the XAU/USD.
Gold price is holding comfortably above the 21-Simple Moving Average (SMA) at $2,363, having reclaimed that barrier in Monday’s North American trading.
The Relative Strength Index (RSI) is pointing north while above the 50 level, currently near 61.0, justifying the latest move higher.
If buying momentum gains traction, immediate resistance is seen at the $2,400 round figure, above which the record high of $2,432 will be retested.
On the downside, if the Gold price breaches the 21-SMA support at $2,363 once again, the 100-SMA at $2,340 will rescue Gold buyers.
Further down, the previous week’s low of $2,319 could be put to the test.
Chances that the Fed will hold rates in July and September rose above 50% after the data release, lifting the US Dollar alongside the US Treasury bond yields while smashing Wall Street stocks. Risk-aversion extended into Asia to sponsor the latest leg higher in the Greenback against its major peers. The US Dollar Index is challenging five-month highs near 106.40, at the time of writing.
Mixed China’s Gross Domestic Product (GDP) and activity data also added to the downbeat risk tone, underpinning the US Dollar’s haven demand. China's economy grew 5.3% in the first quarter of 2024, surpassing estimates of a 5.0% growth. Despite this, March Retail Sales and Industrial Output fell short of expectations. China's property market struggles persist, with 1Q New Home Sales falling nearly 31% over the year.
Further, hawkish comments from San Francisco Fed President Mary Daly bolstered the Greenback. Daly said on rate cuts, “the worst thing to do is act urgently when urgency isn't necessary.”
However, Gold price appears resilient to a firmer US Dollar, helped by a retreat in the US Treasury bond yields from multi-month highs. Easing geopolitical tensions between Israel and Iran also fails to deter Gold buyers, as they bide time before the next push higher.
“Iran is willing to exercise restraint and has no intention of further escalating the situation,” Iranian Foreign Minister Hossein Amir-Abdollahian told the Chinese counterpart in a phone call early Tuesday.
Investors, however, remain on a cautious footing, as a renewed flare-up in Israel and Iran conflict cannot be ruled out. Next of note for Gold traders remain Fed Chair Jerome Powell’s speech and speeches from a few other Fed policymakers, as the US economic docket is relatively light this Tuesday.
Geopolitical developments in the Middle East will be closely followed for fresh trading incentives in Gold price.