- Summary:
- Gold price is likely to keep rising in the near term, fueled by rising geopolitical tension in the Middle East and looming Fed rate cuts.
Gold price extended its gains on Wednesday as looming Fed interest rate cuts and elevated geopolitical temperatures in the Middle East weighed in. The precious metal was up by 0.4 percent at the spot market, trading at $2,421 per ounce. Similarly, futures gold was up by 0.6 percent and traded at $2,464 at the time of writing. The divergence in the two markets is significant, as it signifies a bullish undercurrent beyond the near-term.
Hamas political head Ismail Haniyeh was killed in Tehran in an overnight strike on Thursday, hours after Israel said it had killed senior Hezbollah commander, Fuad Shukr. Both Iran and Hamas have vowed strong responses against Israel, in what could potentially expand the scale of the war. Markets reacted to the new developments with a leaning towards safe haven assets like gold.
Meanwhile, pressure remains on gold price in Wednesday’s intraday session as focus shifts to the scheduled address by the Federal Open Market Committee (FOMC) on the prospects of expected interest rate cuts. That said, the dollar has support from better-than-expected JOLTs Jobs numbers released on Tuesday, which came in at 8.184 million versus the forecast 8.020 million.
Gold price momentum indicators
The momentum on gold price is upward-leaning as seen on the 4-hour chart. The price is stable above the Volume Weighted Moving Average (VWMA) indicator, signaling control by the buyers. In addition, the Relative Strength Index (RSI) is at 65, adding support to the upside view.
Support and resistance levels
The 30-minute chart favours control by buyers above the, $2,420 pivot price. However, the upward momentum will likely encounter resistance at $2,426, but extended control by the buyers could breach that mark and potentially lift the price to test the second resistance at $2,432. On the other hand, a break below $2,420 will signal control by the sellers, with the downside likely to find the first support at $2,412. Extended control at that point could breach that support, thus invalidating the upside view and potentially resulting in a stronger downside movement to test $2,406.
