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Gold (XAU) Daily Forecast: Safe Haven Demand Holds, Price at $2,380

By:
Arslan Ali
Published: Apr 17, 2024, 05:57 GMT+00:00

Key Points:

  • Fed's hawkish stance and strong U.S. dollar push gold down to $2,380, away from $2,400 highs.
  • Geopolitical tension between Iran and Israel bolsters gold's appeal as a safe haven asset.
  • Elevated U.S. interest rates reduce gold's attractiveness, capping potential price gains.
Gold (XAU) Daily Forecast: Safe Haven Demand Holds, Price at $2,380

In this article:

Market Overview

Gold prices have seen a modest retreat in Asian trading, down to $2,380 per ounce, largely influenced by strong comments from Federal Reserve officials which have buoyed both the U.S. dollar and Treasury yields. These comments have exerted downward pressure on gold, which had previously reached a near-record high of $2,400 per ounce last week following military tensions between Iran and Israel.

Persistent Geopolitical Concerns Sustain Safe Haven Demand

Despite recent pullbacks, gold remains near these peak levels, sustained by ongoing fears of a potential conflict between Iran and Israel. Market anxieties are heightened with reports suggesting that an Israeli military response could be imminent, reinforcing gold’s status as a safe haven during times of geopolitical uncertainty.

Impact of U.S. Economic Data and Interest Rate Expectations

Recent U.S. economic data revealing stronger-than-expected inflation and retail sales have led investors to adjust their expectations about the Federal Reserve’s interest rate trajectory. Following these reports, Fed Chair Jerome Powell emphasized the likelihood of maintaining elevated interest rates due to persistent inflation, which resonated in the financial markets.

The dollar reached a five-month high, and the likelihood of the Fed holding rates steady in June has increased to approximately 80%, as per the CME FedWatch Tool. This scenario limits the potential for gold price gains, as the metal, which offers no direct yield, becomes less attractive in a high-rate environment.

Gold Prices Forecast

Gold - Chart
Gold – Chart

On April 17, Gold (XAU/USD) is modestly down at $2,380.59, a decline of 0.06%. The metal’s price remains just above its pivot point at $2,363.79, indicating potential resilience in the market. Immediate resistance levels are found at $2,403.98, followed by $2,431.98 and $2,459.86. Should gold surpass these barriers, it could signal a continuation of the upward momentum.

Conversely, should gold fall below its pivot, it could encounter support at $2,323.92, with further supports at $2,296.85 and $2,268.55 potentially coming into play. The technical indicators, including the 50-day Exponential Moving Average (EMA) at $2,346.91 and the 200-day EMA at $2,235.26, both suggest a bullish trend over the medium to long term.

Overall, the market posture for gold remains positive as long as it maintains above $2,363.79. However, a break below this crucial support level could prompt a significant sell-off.

About the Author

Arslan, a webinar speaker and derivatives analyst, has an MBA in Finance and MPhil in Behavioral Finance. He guides financial analysis, trading, and cryptocurrency forecasting. Expert in trading psychology and sentiment.

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