Technical Analysis

Gold bulls target $2,600 amid rising geopolitical tensions

Gold Prices Steady Amid US Dollar Strength and Geopolitical Tensions

The gold price continues to rally above all-time highs as bulls take firm control. The gold strength comes despite a strong Dollar but what is driving this price action?

On one side, Asian markets have been declining, influenced by the possibility that the FED is likely to delay interest rate cuts. This is due to stronger-than-expected US retail sales data.

US retail sales increased by 0.7% last month, with February’s data revised up to show a 0.9% rise. This surpassed the anticipated 0.3% increase. As a result, the likelihood of the Fed maintaining interest rates in July and September has risen above 50%.

This has strengthened the US Dollar and US Treasury bond yields, which has negatively impacted Wall Street stocks. The US Dollar Index is approaching five-month highs, currently near 106.40.

However, despite the stronger US Dollar, gold prices have remained stable. This is due to a slight retreat in US Treasury bond yields and persistent geopolitical tensions between Israel and Iran as investors scramble for safe-haven assets.

Given the information and the chart for Gold Futures (GC), we are looking at a strong bullish trend. Here are the trade opportunities:

Gold Futures Technical Analysis

Gold Long Opportunities:

  • Entry Point: Consider opening long positions if the price holds steady above the 21-SMA. This move signals continued buyer interest and a potential push towards higher levels.
  • Profit Targets: The first target would be the immediate resistance at $2,400, which is the most recent high. Beyond that, aim for $2,600, which is the extension of the ascending triangle breakout on the weekly chart.
  • Stop-Loss: Stops for long positions could be placed slightly below the 21-SMA at around $2,360 to protect against a false breakout.

Risk Considerations:

  • The RSI at around 82 indicates bullish momentum but is in overbought territory.
  • Gold markets are very sensitive to macroeconomic news, geopolitical events, and USD fluctuations, so stay vigilant for such developments that could impact these trade setups.
  • Use proper position sizing to manage exposure and consider scaling into positions to manage risk effectively.

Always ensure to manage risk through proper position sizing and by using stop-loss orders to protect your capital. Stay updated with market news that could affect Gold prices, and be ready to adjust your trading plan accordingly.