Article by: ETO Markets
Gold prices rose 1.50% on Friday to close at a two-week high of $2,710, helped by a drop in the 10-year U.S. Treasury yield to 4.40% and rising geopolitical risks. The potential for further expansion of the Russia-Ukraine conflict, coupled with tensions in the Middle East, has boosted demand for gold as a safe-haven asset. In addition, while U.S. economic activity has been mixed, improvements in the services sector and the composite PMI have eased some concerns about an economic slowdown. At the same time, Federal Reserve officials have become more concerned about stagnant inflation, and while most officials still prefer accommodative policies, the Fed may slow down the pace of rate cuts if inflation remains above the 2% target.
Gold prices continued to strengthen after breaking through the 50-day simple moving average (SMA) of $… this week, and are now targeting the $… resistance level. If it breaks through this level, gold may further test the historical high of $… and even the psychological level of $…. In the optimistic scenario, Goldman Sachs believes that $… is the next major resistance level.
On the downside, if gold prices fall below the $… support, it may consolidate in the $…-$… range. If it falls below $… (November 14 low), it may further test the psychological support level of $…. The relative strength index (RSI) shows a bullish signal, indicating that buyers are dominating the current market.
