Gold price (XAU/USD) witnessed a significant rally, surpassing 1% on Monday, driven by safe-haven flows amidst escalating tensions in the Middle East and Ukraine. The dovish expectations from the Federal Reserve also weakened the US Dollar (USD), propelling the non-yielding yellow metal towards the monthly peak during the Asian session on Tuesday.
However, the positive market sentiment led to some profit-taking during the Asian session on Tuesday. Bulls are cautious and waiting for the US inflation data release before making any further moves. Despite this, the commodity remains near its all-time high reached in July, hinting at a potential break above the short-term range held in recent weeks.
Key Market Movers: Gold Price Outlook Amid Geopolitical Risks and Fed Actions
- Israel’s increased activities near Gaza and concerns of broader conflict in the Middle East boosted demand for gold as a safe-haven asset.
- Tensions between Russia and Ukraine, along with expectations of a 50 basis points rate cut by the Fed, continue to support the upward trend for gold.
- The upcoming US inflation data releases, including the Producer Price Index (PPI) and Consumer Price Index (CPI), will provide insights into the Fed’s policy direction.
Technical Analysis: Gold Price Targets All-Time High
From a technical standpoint, the breakout above the $2,448-2,450 resistance level signals a bullish momentum for gold. Oscillators on the daily chart support further upside movement, with a potential retest of the all-time high around the $2,483-2,484 range. Breaking above $2,500 could open the door for a sustained uptrend.
On the downside, the $2,450-2,448 region acts as immediate support, followed by $2,424-2,423 and $2,412-2,410 levels. A break below $2,376-2,375 could shift the bias in favor of bears, targeting the late July low near $2,353-2,352.
Expert Insights on Gold Investment
Gold is a valuable asset during turbulent times, serving as a safe-haven investment and a hedge against inflation and currency depreciation. Central banks, especially from emerging economies, are increasing their gold reserves to enhance economic stability. The price of gold is influenced by various factors, including geopolitical tensions, interest rates, and the US Dollar performance.
Understanding these dynamics can help investors make informed decisions about incorporating gold into their investment portfolios.