Gold Price Sees Fresh Impulse Amidst Geopolitical Tensions

XAU/USD kickstarts the week with renewed momentum, embarking on a steady ascent during the early European session. The price rebounded within the 50% – 61.8% Fibonacci area, a crucial zone in the context of a bullish trend. The dynamic support trendline, in conjunction with the 200 moving average, played a pivotal role in rejecting the price drop.

Geopolitical Dynamics:

As the market braces for key central bank events, escalating conflicts in the Middle East emerge as a significant tailwind for the safe-haven Gold price. The flight to safety pulls down US Treasury bond yields, providing additional support to XAU/USD. Despite the US Dollar (USD) remaining below a one-month high, it contributes little impetus to the gold market.

Potential Challenges:

While geopolitical tensions favor Gold, diminishing expectations for a more aggressive policy easing by the Federal Reserve (Fed) in 2024 pose a challenge. This could act as a tailwind for the USD, potentially limiting the upside for the non-yielding Gold price. As a result, cautious optimism is advised for bullish traders, prompting a wait for strong follow-through buying to confirm a potential bottom around the $2,000 psychological mark.

Outlook:

Our outlook for XAU/USD remains bullish, targeting a take profit at the $2068.000 area and the psychologically significant $2000 level serving as our stop loss. Traders are encouraged to monitor geopolitical developments, central bank actions, and market sentiment for a comprehensive understanding of Gold’s trajectory in the coming sessions.