Despite the increase in US Treasury yields, gold prices reached an all-time high of $2288.59 during the Asian session, propelled by escalating geopolitical tensions. The price of gold increased due to investors seeking refuge in safe-haven assets in response to economic indicators emanating from the United States.
Gold Soared On Geopolitical Tension
Gold prices were positively impacted by the Israeli assault on an Iranian embassy in Syria on April 1, despite the concurrent appreciation of US yields and the strengthening of the US Dollar earlier in the week. Furthermore, an increase in employment openings, as reported by the US Bureau of Labour Statistics (BLS), signifies a labor market that is becoming increasingly constrained. Concurrently, the US Census Bureau observed a rise in factory orders.
The February summary of labor Openings and Labour Turnover (JOLTS) indicated a labor market that was comparatively stable in terms of economic indicators. The available positions amounted to 8.756 million, marginally exceeding initial projections. The growth rate of factory orders in February rebounded to 1.4%, surpassing expectations after a decline in January.
Fed's Opinion On Rate Decisions
Loretta Mester, president of the Federal Reserve Bank of Cleveland, defied expectations regarding whether a rate reduction would occur at the forthcoming May meeting. However, she predicted three rate cuts in 2024, underscoring the Fed's difficulty in balancing inflation and employment risks. In the same way, Mary Daly, president of the Federal Reserve Bank of San Francisco, underscored the Fed's importance in ascertaining the length of time it will maintain current interest rates. She endorsed the projection of three rate cuts but clarified that it is merely a forecast and not an obligation.
In light of recent inflation data, Fed Chair Jerome Powell expressed concurrence with the Fed's anticipations and recommended a prudent stance regarding forthcoming monetary policy determinations instead of an overreaction to inflationary forces. Reflecting market sentiment regarding the Fed's prospective interest rate adjustments, the CME FedWatch Tool assigns a 58% chance that the US central bank will reduce borrowing costs in the future.
Gold Price (XAUUSD) Technical Analysis
In the weekly XAUUSD price, an ongoing bullish impulsive momentum is visible, where the recent price trades at an all-time high. The buying pressure came with a solid rally-base-rally formation, with no sign of a recovery. In this context, investors should closely monitor the intraday price action to find the trend continuation opportunity.
As per the above image, the most active level is visible at the 1937.95 level, as shown by the Visible Range High volume indicator. Therefore, an upward continuation is potent as the current price hovers above this line.
The 14-week Relative Strength Index (RSI) remains above the 70.00 level, which suggests an overbought market condition. The dynamic 20-week SMA is also below the current price with an upward slope.
Based on this outlook, the XAUUSD can move higher until a bearish exhaustion appears at the top. On the bullish side, the next resistance level to look at is 2355.05, which is the 161.8% Fibonacci Extension level from the 2071.22 high to the 1611.94 low.
On the other hand, any bearish exhaustion at the top with a stable market below the 50-week EMA could limit the buying pressure at any time.
