Gold price falls as Middle East tensions ease – Forecast – April 24, 2024

The yellow metal continues to fall, depressing investors and making them re-evaluate their trading strategies. However, some analysts are confident the precious metal will bounce in the near future, seeing it as a natural step toward a downturn ahead of another rally. Although some market participants remain skeptical about gold’s near-term prospects, optimism from experts supports investors.

On Monday, April 22, precious metal prices plummeted due to declining geopolitical risks and lower demand for safe assets. As a result, gold fell more than 2.7%. According to estimates, the intraday decline in gold was the largest since June 2022.

Metal values ​​have fallen as tensions ease in the Middle East. These developments have reduced the risk premium in the market. Gold continues to decline after its sharpest decline in two years.

The catalyst for the current decline in precious metal prices has been the easing of the conflict between Israel and Iran. Against this backdrop, many experts are pessimistic about gold’s near-term prospects. They believe investors will turn to other sources of capital preservation. According to some experts, the price of the precious metal could fall below the $2,300 per ounce level and then plummet to $2,200 per ounce. Analysts recommend bracing for a significant decline in the yellow metal amid severely overbought conditions, as evidenced by the RSI on the daily chart.

Currency strategists at ABN AMRO bank maintained their forecast that gold would fall to $2,000 an ounce by the end of 2024, leading to major losses. The reasons, according to banking experts, are excessively high current prices, a strong dollar, liquidation of gold ETF assets, and the absence of a physical gold shortage in global markets.

Experts believe the yellow metal’s current decline (more than 2.7%) is the most significant decline in the past two years. Gold futures on New York’s Comex exchange plunged to $2,346.4 per ounce at the close of trading on Monday, reaching their lowest level since April 5, 2024. On Tuesday April 23, the price of the precious metal fell 0.85% before falling again by 1.3%. %. Gold is currently trading at $2,316.45 per ounce.

Also weighing on the precious metal is the fact that the Federal Reserve is likely to keep its tight monetary policy in place for much longer than expected in early 2024. The focus of market attention is on the release of key indicators, the main inflation indicator in the United States. The personal consumption expenditures price index, which regulators pay special attention to when assessing risk. This report will be released on Friday, April 26th. According to the provisional forecast, the March indicator decreased by 2.6% compared to the same period last year. Remember that the value in February was 2.8% year-over-year.

Many investors expect geopolitical tensions to ease somewhat. At the same time, market participants are turning to riskier assets such as stocks. The size of long gold futures and options positions among major market participants hit a four-year high, according to CFTC data. The reason for profit taking was a fairly sharp decline in the value of precious metals. Moreover, despite the sharp rise in the value of the dollar in recent months, the value of gold and silver has risen. In the current situation, the risk of a serious correction in precious metals is increasing.

However, according to some analysts, there are favorable factors contributing to gold’s further rise. Tailwinds for the yellow metal will be interest rate cuts from the US Federal Reserve, global instability and rising US government debt. Against this background, even Bank of America economists, who are skeptical about the outlook for gold prices, expect the price to rise to $3,000 by 2025. Citibank analysts are also optimistic about gold, predicting that gold prices will rise in the next six years. –18 months. Many investors maintain this stance and argue that the record price of $3,000 per ounce will be surpassed within a few years.

The improving outlook for gold prices in 2024 has increased investor optimism. It is worth noting that according to these forecasts, metal values ​​are expected to rise in the near future. Confidence in such a scenario will enable market participants to overcome current market challenges and prepare for the coming gold rally.