- Gold reaches a maximum of two months at $ 3,452 but then goes back as traders make benefits.
- The markets are still focused on the Israel-Iran conflict and the increase in global geopolitical risks.
- The US dollar (USD) is experiencing a slight impulse due to the increase in yields of the treasure bonds to 10 and 30 years before the Fed meeting on Wednesday.
The gold (Xau/USD) is experiencing a slight setback during the European session after reaching a maximum of two months of $ 3,452.72 in the Asian session on Monday.
Geopolitical tensions, especially the conflict between Israel and Iran, have contributed to support gold prices. However, after reaching its maximum point, the Xau/USD retreated, quoting above $ 3,400 at the time of writing.
The main drivers of gold prices so far have been their attractiveness as a safe refuge, the movements in the yields of the 10 -year Treasury bonds of the US and the taking of benefits at higher levels.
Tensions between Israel and Iran have intensified over the weekend and are entering the fourth day of fighting without relief signs. The International Community, including the United Nations (UN), Saudi Arabia and the US, has requested calm and urged the unfaired.
What moves the market today: gold is still supported by the Israel-Iran conflict
- Israel’s attack to Iran has aimed military and nuclear sites. The so -called “Ascending León Operation” was launched by Israeli leadership on Thursday night and has resulted in the death of Iranian, scientific and civil military leaders.
- The International Atomic Energy Agency (AIEA) reported on the attacks on Friday. The recent statement indicates that some facilities have been damaged in Iran until now. Natanz’s enrichment installation has suffered significant damage. The ISFAHAN Nuclear Technology Center (ESFAHAN) was also attacked, resulting in damage to uranium metal production facilities.
- The Iranian Ministry of Health has reported that the death toll is currently 224. According to CNN, the number of deaths in Israel has been reported in 24. Both countries have expanded the scope of attacks as the conflict enters its fourth day.
- The United States will carry out a 20 -year bond auction during the American session at 5:00 p.m. GMT. The auction will test the bond market after the concerns of the sustainability of the US debt have increased the performance of the bonds in the last auction of this type – the interest rate that a fork receives to invest in a bonus – stood at 5,047%, the highest level since October 2023. The yields influence the valuation of the US dollar high can attract investment to the dollar, which in turn presses gold prices.
- The Federal Reserve (FED) will announce its decision about interest rates on Wednesday. Investors generally expect the FED to keep the rates in the current range of 4.25%-4.50%.
- The Open Market Committee meeting of the Federal Reserve (FOMC) will be closely monitored, as well as the FED press conference and the Summary of Economic Projections (popularly known as the points chart). These events will provide information on the economic risks and factors that the Fed is observing, which will be presented by the president of the FED, Jerome Powell. Attention will focus on the projection on the trajectory of interest rates and perspectives for the US given the current conditions.
Technical Gold Analysis: XAU/USD Rwells $ 3,450
Gold prices are going down, quoting about $ 3,415 at the time of writing on Monday. However, the 4 -hour graph shows that the losses have been limited. After reaching a peak of 3,452 $ early in the day, a combination of benefits and technical support has limited the range of Xau/USD.
The immediate upward obstacle appears around $ 3,439, which marked the monthly maximum in May. The next resistance level for short -term movement is $ 3,446, which came into play on Friday, and the maximum daily at $ 3,452. A rupture of this level could result in a test of the historical maximum of $ 3,500 established in April.
Downwards, the initial support is at the psychological level of $ 3,400, which is aligned with the simple mobile average (SMA) of 20 periods in the 4 -hour graph. The fibonacci setback of 23.6% of the April movement is $ 3,372.
Gold (Xau/USD) 4 -hour graphics
Beyond that level, the 50 periods SMA at $ 3,363 provides another defense layer, with deeper support levels at the Fibonacci recoil level of 38.2%, located about $ 3,292.
Meanwhile, the indicator of the Relative Force Index (RSI) in the 4 -hour graph is 59 and is stabilizing after falling below the overcompra conditions, suggesting that the upward trend remains intact, although with a slight relief in the impulse.
FAQS GOLD
Gold has played a fundamental role in the history of mankind, since it has been widely used as a deposit of value and a half of exchange. At present, apart from its brightness and use for jewelry, precious metal is considered an active refuge, which means that it is considered a good investment in turbulent times. Gold is also considered a coverage against inflation and depreciation of currencies, since it does not depend on any specific issuer or government.
Central banks are the greatest gold holders. In their objective of supporting their currencies in turbulent times, central banks tend to diversify their reserves and buy gold to improve the perception of strength of the economy and currency. High gold reserves can be a source of trust for the solvency of a country. Central banks added 1,136 tons of gold worth 70,000 million to their reservations in 2022, according to data from the World Gold Council. It is the largest annual purchase since there are records. The central banks of emerging economies such as China, India and Türkiye are rapidly increasing their gold reserves.
Gold has a reverse correlation with the US dollar and US Treasury bonds, which are the main reserve and shelter assets. When the dollar depreciates, the price of gold tends to rise, which allows investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rebound in the stock market tends to weaken the price of gold, while mass sales in higher risk markets tend to favor precious metal.
The price of gold can move due to a wide range of factors. Geopolitical instability or fear of a deep recession can cause the price of gold to rise rapidly due to its condition of active refuge. As an asset without yield, the price of gold tends to rise when interest rates lower, while the money increases to the yellow metal. Even so, most movements depend on how the US dollar (USD) behaves, since the asset is quoted in dollars (Xau/USD). A strong dollar tends to keep the price of gold controlled, while a weakest dollar probably thrusts gold prices.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
