Market Overview
Gold prices declined in Monday’s Asian trading session, influenced by easing tensions in the Middle East and expectations of persistent high U.S. interest rates, which together exerted downward pressure on the yellow metal.
Easing Geo-Political Tensions Soften Gold’s Appeal
Gold, which had previously surged to a record high of over $2,400 per ounce amidst escalating strikes between Iran and Israel, saw its demand as a safe haven diminish.
Iran’s response to an Israeli strike appeared conciliatory, with official statements downplaying the likelihood of immediate retaliation. This reduction in immediate war fears prompted investors to pull back from gold, which decreased its price by approximately 1.2%.
Continued Regional Instability Keeps Investors Cautious
Despite some de-escalation, the geopolitical landscape remains volatile. Recent strikes against a U.S. base in Syria and ongoing offenses in Gaza have maintained a level of risk, suggesting that while the peak crisis may have abated, the region is far from stable.
This ongoing instability continues to support a baseline demand for safe-haven assets like gold.
Impact of U.S. Monetary Policy on Gold
Compounding the impact on gold prices, the U.S. dollar held near five-month highs and Treasury yields rose, reflecting market sentiment that the Federal Reserve might maintain higher interest rates longer than previously expected.
With the Fed dismissing a potential rate cut in June following robust March inflation figures, the cost of holding gold, which yields no interest, becomes less attractive. This anticipation has catalyzed a shift in investment away from gold, contributing to its recent price correction.
Overall, while gold prices are currently retreating due to reduced emergency buying and strong U.S. economic indicators, the ongoing geopolitical risks and monetary policy developments will continue to play a crucial role in shaping the XAU/USD price forecast.
Gold Prices Forecast
Gold – Chart
Today’s analysis of Gold (XAU/USD) reflects a significant price drop to $2370.055, marking a decline of 1.02%. The pivot point at $2360.46 is crucial, as breaking this level could intensify the selling pressure, pushing prices towards the immediate support at $2323.92. If breached, further support lies at $2296.85 and $2268.55.
Conversely, resistance levels are set at $2403.98, followed by $2431.98 and $2459.86, which could cap upward movements. The technical setup shows the 50-Day Exponential Moving Average (EMA) at $2364.06 offering potential support, while the 200-Day EMA at $2258.09 underscores a longer-term bullish trend.
Should Gold surpass the $2323.92 mark, it might indicate a return to bullish momentum, although current indicators lean towards a bearish bias unless it can sustain levels above the immediate support.
This article was originally posted on FX Empire
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