Gold rises amid escalating geopolitical concerns and anticipation of US inflation data
Gold at the fundamental level
Gold prices rose during trading on Tuesday to reach around $5,180 per ounce, after falling yesterday to levels close to $5,000 before rebounding, supported by growing geopolitical concerns in the Middle East.
The precious metal's rise was supported by a weak dollar and renewed uncertainty about the path of US interest rates, amid continuing concerns about inflation linked to energy price volatility.
In contrast, oil prices fell this week after rebounding yesterday from their highest levels since June 2022, at around $120 per barrel, before falling today to below $90, which temporarily eased inflation fears and brought interest rate cut expectations back to the fore, supporting gold prices.
Gold is one of the most important hedges against inflation and usually benefits from lower interest rates, as falling yields reduce the cost of holding the non-yielding metal.
At the same time, investors are awaiting the release of US inflation data this week, led by the Consumer Price Index (CPI) on Wednesday and the Personal Consumption Expenditures (PCE) index on Friday, which is the Federal Reserve's preferred measure of inflation.
These two indicators are expected to play an important role in determining the course of US monetary policy in the coming period and whether the Federal Reserve will move towards cutting interest rates in the coming months or not.
Gold on the technical side
So far, gold is fulfilling the positive scenario we discussed in yesterday's analysis here
as it rebounded from very strong support levels for the fifth consecutive day at $5,080 per ounce, without closing below it, which opens the door to a new wave of gains.
In this scenario, gold is expected to target $5,300 per ounce as its first target, then complete the harmonic pattern towards $5,460 per ounce.
The realization of this scenario depends largely on the price's ability to maintain trading above this support level.
Those who bought based on yesterday's analysis may reap some of the profits after gold rose 1,000 points so far and secure the rest of the contracts at the entry levels.
