The price of gold, shown as XAU/USD, has been dropping for two days in a row, and today it’s near $2,300, which is the lowest it’s been in over two weeks. Even though there was an attack on US forces in the Middle East last night, investors are feeling positive because they don’t think the conflict between Iran and Israel will get worse. Also, there’s a feeling that the Federal Reserve might wait longer before lowering interest rates. These things are making people less interested in buying gold, which doesn’t pay interest.
At the same time, people are expecting the Federal Reserve to be more cautious about lowering interest rates. This expectation keeps the yields on US Treasury bonds high and makes the US Dollar strong, almost as strong as it was in November last year. Because of this, gold prices are under pressure. However, some people think that big central banks might still lower interest rates this year, which could prevent gold prices from dropping too much. Traders are also waiting to see how the US economy did in the first quarter of this year and how much people spent, before they decide what to do next.
Daily Digest Market Movers: Gold Price Undermined by Easing Middle East Tensions, Hawkish Fed Expectations
Iran hinted that it won’t strike back after Israel’s small missile attack on Friday. This made people less interested in gold, which is seen as a safe place to put money during uncertain times. Also, good news about jobs in the US and higher prices for things people buy regularly made investors think the US might not cut interest rates soon. They now expect the US to start lowering rates in September, but not by as much as they thought before. This makes the US Dollar stronger and pushes down the price of gold even more.
Investors also think that many big countries might lower their interest rates later this year to keep their economies growing. This could help gold prices in the long run.
Traders are waiting to see how factories around the world are doing and how well the US economy did in the first part of this year. This information will give them a better idea of where things are headed.
Technical Analysis: Gold Price May Keep Falling if $2,300 Level Is Firmly Broken
If the price of gold breaks and stays below the 23.6% Fibonacci retracement level (a way of measuring price movements) from February to April, it could keep going down for the day. But, be cautious because some indicators on the daily chart are still positive, though losing momentum. It’s better to wait and see if the price falls below $2,300 before expecting bigger drops. If it does, gold might go down to around $2,260-$2,255, then to $2,225, and possibly even lower to around $2,200-$2,190.
If the price of gold tries to go up, it might face difficulty around $2,325 at first. But if it manages to go beyond that level, it could gain more momentum and reach around $2,350-$2,355, then possibly even up to $2,380. After that, it might aim for $2,400, and if it surpasses that, it could signal a new opportunity for people who think the price will keep going up. This could continue the strong upward trend we’ve seen in the past couple of months.
