Gold Price Analysis – Gold Races Higher with Dropping Rates

Gold Technical Analysis

Gold markets have rallied significantly in the early hours on Wednesday as we have touched the 50-day EMA. Interest rates have collapsed as traders get wind that the Americans and the Iranians might be getting closer to a peace deal. This of course has more risk appetite coming into the market and therefore rates drop.

Higher rates have been toxic for gold for some time, despite the fact that most people were taught gold is an asset that picks up strength during war. That can be true, but not always and in this case, it’s the not always version that we have seen. With that being said, it’s just simpler and cheaper to hold paper instead of paying to hold metal with storage fees, etc.

Market Sentiment and Technical Resistance

Now with that being the case, the US dollar shrinks, rates drop, gold rallies. But notice how it hit the 50-day EMA and then pulled back. That tells me something. That tells me that market participants have also heard this story before and they might be a little hesitant to go all in on gold.

This was a nice short-term pop, but the first signs of trouble out of the Middle East, gold probably drops right back to the $4,600 level, so be cognizant of that. If we can close above the 50-day EMA, that could provide a little bit of momentum.

That being said, this is a very difficult environment that we find ourselves in and ultimately, I think we’re still basically just bouncing around in consolidation. This means short-term trades, and smaller positions to protect your account.

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