Market Analysis

As Middle East tensions rise and bets on the Fed rate are lowered, the price of gold rises to a one-week high

Amos Simanungkalit · 12 Aug148.9K Views

Gold price (XAU/USD) continues to gain traction for the third consecutive day on Monday, reaching a one-week high around the $2,439-2,440 range during the early European session. Ongoing geopolitical tensions in the Middle East are a significant driver for the safe-haven asset. Additionally, increasing expectations for more substantial interest rate cuts by the Federal Reserve (Fed) provide additional support to the non-yielding commodity.

However, a positive risk sentiment may prevent traders from taking strong bullish positions on Gold. Market participants are also likely to remain cautious ahead of this week's release of key US inflation data – the Producer Price Index (PPI) on Tuesday and the Consumer Price Index (CPI) on Wednesday. As a result, it may be wise to wait for sustained buying interest before betting on an extended rally from the 50-day Simple Moving Average (SMA) support.

Technical Outlook: Gold price must clear the $2,448-2,450 barrier for bulls to gain momentum

From a technical standpoint, the recent rebound from the 50-day SMA support favors a bullish outlook. Additionally, daily chart oscillators are in positive territory. However, the absence of strong follow-through warrants caution before expecting a significant upward move. In the short term, any upward movement is likely to face resistance around the $2,448-2,450 region. If buying interest continues, it could pave the way for a challenge of the all-time high near $2,483-2,484 reached in July. Beyond this, the $2,500 psychological level could become the next target, and a decisive break above it would signal further near-term gains.

On the downside, the $2,412-2,410 horizontal resistance, now acting as support, is likely to limit immediate declines, with the $2,400 level providing additional support. Any further drop could attract buyers around the 50-day SMA support, currently near the $2,373-2,372 region. This area should serve as a critical pivot point; a break below it could see Gold price decline to the late July low of approximately $2,353-2,352, which coincides with the 100-day SMA support.