Market Analysis
Gold prices continued their upward movement on Tuesday, benefiting from a weakened US dollar following the latest US Nonfarm Payrolls (NFP) data, which increased expectations of potential interest rate cuts by the Federal Reserve later in the year. This anticipation of monetary easing makes gold more attractive for foreign buyers, potentially driving its price higher. Additionally, ongoing strong central bank purchases and demand from Asian markets provide further support to the precious metal in the short term.
Moreover, geopolitical tensions in the Middle East are contributing to safe-haven flows, which could further bolster gold prices. However, the tone of the Federal Reserve officials, particularly if they adopt a hawkish stance, may strengthen the US dollar and consequently dampen the appeal of gold priced in USD.
From a technical standpoint, gold prices appear set to consolidate in the near future. Despite trading within a descending trend channel since mid-April, the overall outlook remains positive, with the price of gold staying above the key 100-day Exponential Moving Average (EMA) on the daily chart. The 14-day Relative Strength Index (RSI) also indicates bullish momentum, hovering around 58.0.
Looking ahead, the initial upside target for gold is the confluence of the upper boundary of the descending trend channel and the high of April 26, ranging between $2,350 and $2,355. Further upward movement could encounter resistance near the psychological level of $2,400, followed by the all-time high around $2,432.
On the downside, initial support is expected at the $2,300 level, with a key support level at $2,275, representing both a recent low and the lower limit of the descending trend channel. Additional support levels to monitor include the low of May 3 at $2,228 and the round mark of $2,200.
Paraphrasing text from "FX Street" all rights reserved by the original author.