Gold Analysis and Geopolitical Factors – Analysis and Forecast – April 14, 2024
Weekly Technical and Fundamental Analysis of Gold – April 14
global gold last week It gained momentum and rose by about 0.60%. Switching the time period to weekly, we see that this is the fourth straight week of gold gains.
Very importantly, last week, global gold once again successfully reached new highs and proudly broke the $2400 level. In fact, when gold prices fell to $2,320 last Wednesday, many thought global ounces were about to have a major correction!
However, on the last business day of the week, global gold once again created a new masterpiece, rising to the important level of $2400. Interestingly, gold did this regardless of the strength of the US dollar.
Now, in the absence of strong economic data from the US in the coming weeks, catalysts for the gold market will likely be China’s economic report and geopolitical tensions in the Middle East.
Events in the gold market last week:
Global gold ounces opened last Monday at $2,330, fell a few pips and then began to rise to around $2,354. In fact, gold opened positively for the first two days of last week and closed positively as well, doing very well overall.
Because the entire market was waiting for something very important. Consumer Price Index (CPI) According to the US report, gold trading volumes remained within a small range.
And then Wednesday came. The same day that the entire market was awaiting the US CPI report.
On Wednesday, the Bureau of Labor Statistics reported that U.S. inflation, measured annually by the Consumer Price Index (CPI), rose to 3.5% in March from 3.2% in February.
It is noteworthy that the market expected 3.4%, which was higher than market expectations.
Additionally, the annual core CPI excluding food and energy rose 3.8% during the same period, matching the increase in February.
Finally, it doesn’t hurt to know that both inflation and core monthly growth increased by 0.4% monthly. Interestingly, the market was expecting 0.3%, which was higher than both.
The U.S. 10-year Treasury yield hit 4.5%, the highest since mid-November when the inflation report was released. The US dollar index also surpassed 105, its highest in the past five months, after reading the inflation report.
This important factor led to a corrective decline in gold.
Global gold, which opened at $2,352 on Wednesday, fell to $2,320 and finally ended the business day at $2,333.
It’s interesting to note that the odds of the Fed keeping interest rates on hold in June increased from 40% to 80% before the inflation report was released, according to CME Group, a well-known interest rate forecasting firm.
This important factor sent global gold down nearly 1% on Wednesday, its second deficit in the past two weeks.
The dollar remained strong on Thursday, but gold prices rose again as geopolitical tensions in the Middle East escalated.
In fact, Iran criticized Israel for an attack on its consulate in Syria earlier this month, reviving concerns about deepening conflict in the Middle East and promising retaliatory measures.
This exact, important and essential factor has led to the recent rise in gold prices and conquering new highs of this precious metal.
The day the mayor was waiting for an important meeting European Central Bank (ECB) In April.
After Thursday’s April meeting to decide interest rates, the European Central Bank (ECB) kept its benchmark interest rate within its current range (4.5%). It is worth noting that the market predicted this in advance, and this news did not shake the financial markets.
Do you remember? The U.S. Federal Reserve (Fed) predicted three interest rate cuts this year according to the dot plot, but it appears to be postponing them as economic indicators such as job news and inflation rate announced last Wednesday are strong.
However, this does not apply to the European Central Bank, and there are whispers that the ECB plans to cut interest rates in June. This news was published by Reuters citing three reliable sources!
One of the factors that has increased gold’s sharpness recently is rumors of an ECB interest rate cut and capital outflows from the euro into global gold.
It is interesting to note that the gold-euro currency pair (XAUEUR) also managed to reach historical highs, flying close to $2286 and registering a 9% gain so far in April.
Moreover, this currency pair also grew by 10% last month.
In the end, traders in the market once again rushed to invest in gold, looking for a safe haven on the last working day. This important factor drove global gold to a new record once again, flying to the important level of $2400.
In addition to gold’s benefits as a hedging and safe-haven asset, global ounce purchases by international banks have boosted the price of this precious metal across markets.
The World Gold Council said in its monthly report released earlier this week: Fundamental factors underlying gold’s current growth include rising geopolitical risk, steady purchases by central banks around the world, and strong demand for gemstones, bars and coins.
Next week’s events in forex and gold markets
After two weeks of very strong reports from the markets and the US, the only significant report expected to be released in the US next week is March retail sales data due on Monday.
Economic analysts forecast U.S. retail sales in March would rise 0.3%, up from a 0.6% increase in February.
If for any reason the announced figure is below 0.3%, the US dollar will react negatively to this news and will begin to fall.
Conversely, if US March retail sales are higher than 0.3% for any reason, the dollar will strengthen again and continue its upward trend.
Then on Tuesday and during the Asian trade session, China is expected to announce: Gross Domestic Product (GDP) First quarter of 2024.
Traders are following these reports closely because China is the world’s second-largest economy and news of China’s GDP will affect many assets.
Economic analysts and financial market experts forecast that China’s gross domestic product (GDP) will increase from 5.2% growth in the fourth quarter of 2023 to 5% in the first quarter of 2024.
Keep in mind that a disappointing gross domestic product (GDP) report from China, the world’s largest consumer of gold, could raise concerns about the demand outlook for this precious yellow metal and limit the near-term upside for XAU/USD.
Conversely, if China’s GDP Gold traders will be more optimistic about China’s economic situation as the first quarter of 2024 will be better and stronger than market expectations, which will lead to a further rise in gold prices.
Moreover, recent geopolitical tensions between the Islamic Republic and Israel are playing a significant role in global gold price trends and traders will be closely monitoring this news. Typically, if tensions between Israel and Iran decrease for any reason, gold will continue to correct downwards.
On the other hand, if tensions between the Islamic Republic and Israel escalate for any reason, gold will continue its upward trend.
Additionally, XAU/USD is likely to continue to find support in a risk-off environment even as the dollar continues to outperform its peers (the biggest reason for the dollar’s strength is strong data from the US, delaying the start of rate cuts Because it happens). ).
Weekly technical analysis of gold
Last week, the lower and upper limits of gold price were $2302 and $2431. If we now open the daily gold chart and plot the RSI indicator, we can see that the high point of the indicator is moving downwards within the overbought area and displays a value of 72.
This means that control is still in the hands of market bulls, but they should be ready for a correction from new historical highs at any time.
Moreover, if we plot a rising channel on the daily time frame, we can see that this time global gold has crossed the channel upper limit and is moving significantly higher compared to the channel upper limit.
Key Support Levels in Global Gold Ounces Analysis
If gold prices are expected to fall, the first important support level will be the important area of $2330. If gold penetrates below this area, the next major price level is $2320. If market weakness pushes gold lower, the next important levels would be $2300 and $2290.
Key Resistance Levels in Global Gold Ounces Analysis
If gold moves higher, the first important resistance level will be $2350. If gold successfully exceeds this area, the next major level is $2360. If the market rally pushes gold prices higher, the next resistance levels would be $2,370 and $2,380.
disclaimer: This article is for informational purposes only and should not be considered financial advice. Please consult a qualified financial advisor before making any investment decisions.
happy trading
May the pips be in your favor!
