Gold: Never a Quiet Week
Gold has been considered a highly valuable commodity for millennia and its price is widely followed in financial markets around the world, making it one of the most traded assets.
It is mostly quoted in US Dollars, and its price tends to move in the opposite direction of stocks and bonds.
Because it holds its value well, it is considered a safe haven, thus making it an attractive choice to trade the intraday spot rate.
A lot has happened that has and will cause volatility, which could mean trading opportunities as well.
Let us look at the recent developments regarding gold:
For the third day in a row, gold has been on an uptrend, having broken the 1900 USD figure previously. This momentum has pushed its price to the highest level since April of 2022, around the 1960 figure over the first half of the European session. Whether there is going to be a strong follow-through, remains to be seen.
As expected, the Federal Reserve decided to raise interest rates by 25bps and reaffirmed that it will continue on the same path to soften price pressures. Rate increases mean higher borrowing costs for the US economy, which could in turn lead to an economic slowdown. Hence, speculation on the said matter has increased further. Also, the Fed Chairman has been clear that there won’t be any rate cuts later in the year. Announcements and actions like these may mean increased demand for gold, due to it being considered a safe haven. In other words, the softer tone of the Fed announcements can serve as support for gold. However, this will also depend on the risk appetites of traders, as well as on other announcements such as the one from the European Central Bank.
Following the announcements of Thursday, there will be a renewed focus on the US jobs data from the US. Traders will be looking for cues from the Initial Jobless claims and in the well-known NFP report releases. These reports could serve as a decent indication of the near-term movement of gold, and they represent periods of increased volatility in the market.
From a technical perspective, the fact that the year-to-date level of 1949 has been accepted could be taken by traders as a bullish sign. The Relative Strength Index (RSI) is showing signs of the asset being slightly overbought, but its signal should be taken with caution. At the same time, if the 1970-1980 levels are reached soon, we could be looking at the psychological mark for the first time since 2022.
On the other hand, a pullback below the 1945 area may prompt traders to wait to buy around the 1920-1930 area. One last level to be considered, though currently away from where the market is, is the psychological 1900 figure, if broken it could expose levels around the 1880 support.
Source: GemForex
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