Gold price has made marginal gains in intra-day trading on Tuesday, as the yellow metal holds off pressure from a strong US dollar. Spot market gold was up 0.03%, having opened trading at $2,024. The COMEX April Futures were down 0.07% and trading at $2,041. Notably, the commodity has been trading sideways for the past five days, and investors will be keenly looking for signs of a breakout.
The Fed’s hawkish decision on interest rate cuts has cushioned the dollar against other assets. Furthermore, strong US economic data has added another incentive for the dollar against safe-haven assets like gold. The Fed’s hawkish stance makes a strong case for high bond yields in the near-term, potentially eating into gold’s demand volumes.
Nonetheless, geopolitical developments in the Middle East remain on most investors’ radar. Escalation of hostilities on that front could see gold make significant gains. A visit to the Middle East by US Secretary of State, Antony Blinken, is seen in some quarters as likely to calm the storm over Israel’s potential ground assault on Rafah. Furthermore, the visit could result in a ceasefire between Israel and Hamas. News of ceasefire will likely see gold lose further ground.
However, gold could yet gain from geopolitical conflicts elsewhere in the Middle East if the US increases its military actions in Yemen and Syria. As things are, XAUUSD is likely to find support at the psychological $2,000 level. A break below that level could see gold hemorrhage further. Notably, the commodity has not traded below $2,000 since December 13th, 2023.
XAUUSD looks set to trade above $2,019, and will likely sustain a momentum to meet the first resistance at $2,033. Beyond that point, the market will target $2,041. However, a downward break below the $2,019 pivot could see the first support slip to $2,041, and further downside action will establish the next support at $2,008.
XAU/USD 30 minute chart
This post was last modified on Feb 06, 2024, 11:48 GMT 11:48