Recent movements in the gold market have seen the precious metal finding strong support around the $2,290 mark, triggering a notable rebound fueled by a weakening US dollar. Despite peaking at $2,334 per ounce, gold has faced resistance from technical indicators, suggesting a prevailing negative pressure and the potential for a downward correction.
Mohamed Hashad, chief market strategist at Noor Capital, highlighted the significance of key support-turned-resistance levels, particularly at $2,325, in determining the future trajectory of gold prices. Should gold fail to stabilize above this pivotal level, the likelihood of a resumption in the downward corrective trend becomes pronounced, with targets set at $2,300 and $2,260.
However, Hashad also pointed out the potential for a reversal scenario if gold manages to reclaim stability above $2,325, potentially mitigating losses and initiating a retest towards $2,365/2360. Despite the technical outlook, geopolitical tensions remain a significant factor influencing gold price movements, with Hashad noting ongoing uncertainties in this regard.
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The recent decline in gold prices comes despite a weakened US dollar, as negative economic indicators raised concerns about US economic growth. Challenges such as a decline in manufacturing activity and persistent high-interest rates have contributed to the dollar’s losses, albeit temporarily.
Furthermore, geopolitical tensions that previously boosted gold prices have eased, contributing to the metal’s struggle to regain momentum after reaching a historic high earlier this month. The outlook for gold remains clouded by uncertainties surrounding US monetary policy, with expectations of a rate cut cycle potentially strengthening the dollar against gold in the near term.
Traders are closely monitoring key US data releases, including the Q1 GDP report and Personal Consumption Expenditures (PCE) price index, to gauge the Federal Reserve’s rate cut trajectory and adjust positions accordingly. As gold continues to navigate through these challenging dynamics, prudent traders are advised to stay informed and monitor price behavior around critical levels before committing to further positions.
