Gold price (XAU/USD) rallied to over a three-week high, around the $1,932-1,933 area on Friday in the wake of the intensifying Israel-Hamas conflict, which forced investors to take refuge in traditional safe-haven assets. Apart from this, expectations that the Federal Reserve (Fed) is nearing the end of its rate-hiking cycle provided an additional boost to the non-yielding yellow metal. Bulls, however, struggled to capitalize on the momentum beyond a technically significant 200-day Simple Moving Average (SMA). This, along with elevated US Treasury bond yields, prompts some profit-taking around the Gold price on the first day of a new week. The XAU/USD extends its steady descent through the European session, albeit manages to hold above the $1,900 mark amid a subdued US Dollar (USD) price action. A softer Greenback tends to benefit US Dollar-denominated commodities, including the XAU/USD.
Traders also seem reluctant and prefer to wait for fresh cues about the Fed’s future rate-hike path and important macro releases from China – the world’s second-largest economy – before positioning for the next leg of a directional move for the Gold price. In the meantime, Monday’s release of the Empire State Manufacturing Index from the United States (US), along with Fedspeaks and the US bond yields, will influence the USD price dynamics. Apart from this, the broader risk sentiment should provide some impetus to the safe-haven metal.
From a technical perspective, any subsequent decline is more likely to find decent support near the $1,900 round-figure mark. The said handle coincides with the 100-day SMA and should now act as a key pivotal point. A convincing break below could make the Gold price vulnerable to test the next relevant support near the $1,868 horizontal zone before dropping to the $1,860-1,855 region. On the flip side, bulls might now wait for some follow-through buying beyond Friday’s swing high, around the $1,932-1,933 zone, before placing fresh bets. The Gold price might then accelerate the momentum towards the $1,945-1,947 heavy supply zone. A sustained strength beyond the latter will be seen as a fresh trigger for bulls and pave the way for a further appreciating move.
