The price of gold is attempting a bounce above the $2,060 level in early Wednesday trading, replicating the move seen in the Asian session on Tuesday. Despite an uptick in risk aversion due to ongoing geopolitical conflicts and natural disasters, gold, as a traditional safe-haven asset, is finding support.
Investors are cautious, awaiting key events, including the release of the Minutes of the US Federal Reserve’s (Fed) December meeting and the JOLTS Job Openings data. These events are expected to provide insights into the prospects of interest rate cuts later in the year. Ongoing geopolitical tensions and natural disasters, such as earthquakes in Japan, contribute to the overall cautious sentiment in the markets.
The US Dollar, which experienced a multi-day high, is pulling back amid a sluggish performance in US Treasury bond yields. The anticipation of the Fed Minutes and jobs data may be influencing the US Dollar’s retreat, as aggressive rate cut expectations seem to have eased.
Gold started the year positively, testing the $2,080 level before reversing and settling below $2,060 on Tuesday. The technical analysis indicates that Gold faces resistance at the $2,085 zone and the rising trendline at $2,100. If these levels are breached, the all-time high of $2,144 becomes the next target. The 14-day Relative Strength Index (RSI) suggests upside potential, and the 100-day Simple Moving Average (SMA) is on the verge of a Bull Cross with the 200-day SMA, supporting a bullish outlook.
On the downside, initial support is seen at $2,058, followed by the $2,050 level. The 21-day SMA at $2,038 acts as a critical support level for gold buyers.
As events unfold, including the release of key economic data and geopolitical developments, gold’s price movement will likely be influenced, and traders will monitor these factors for potential trading opportunities.
