Israel-Iran conflict fuels dip-buy in GOLD as focus shifts to Fed
Gold price finds buyers near $3,380 again early Tuesday, reversing Monday’s pullback.
US Dollar pops up on renewed concerns over Israel-Iran geopolitical conflict, trade headlines.
Technically, Gold price remains a ‘buy-the-dip’ trade ahead of the Fed policy announcements.
Gold price is reversing a part of the previous pullback from two-month highs, looking to regain $3,400 in Asian trades on Tuesday. Renewed concerns over the Israel and Iran conflict and trade updates continue to drive the sentiment around the safe-haven US Dollar.
A fresh risk-aversion wave hit Asian markets early Tuesday following reports that US President Donald Trump is leaving the G7 leaders’ Summit early to head back to Washington DC.
Fox News reported that Trump requested the US NSC to be prepared in the Situation Room. This headline added to the risk-off flows as markets began speculating that the US could initiate an offensive operation against Iran, supporting its ally, Israel.
Investors once again scurry for safety in the ultimate store of value, Gold price, while propping the haven appeal of the USD. The renewed USD uptick seems to cap the Gold price rebound.
Further, the bright metal also finds comfort from the news that the US and Japan failed to reach a trade deal on the sidelines of the G7 Summit. Trade uncertainties could act as a headwind to the Greenback, allowing Gold price to sustain the comeback.
Against this backdrop, all eyes turn to the US Fed monetary policy announcements due on Wednesday, with the two-day meeting starting off later on Tuesday.
The Fed is widely expected to keep the fed funds rate unchanged in the range of 4.25%-4.5% this month, with a 60% probability of the Fed lowering the rates in September.
Markets continue to price two 25 basis points (bps) rate cuts by year-end, and therefore, the Fed’s updated economic projections, the so-called Dot Plot chart, will be closely scrutinized alongside Chairman Jerome Powell’s comment to gauge the scope and the timing of the next rate cut.
Any dovish tilt in the Fed’s communication or in the updated forecasts could provide an extra- boost to the non-yielding Gold price while reviving the USD downtrend.
In the meantime, the focus remains on the Bank of Japan (BoJ) policy decision and the US Retail Sales report due later in the day.
The BoJ policy announcements could fuel the USD/JPY pair-driven volatility in the Greenback, eventually impacting the USD-denominated Gold price. But the impact could be limited as Middle East geopolitical headlines and trade updates will likely remain the key market drivers.
Daily technical analysis
Technically, the bullish bias remains intact for Gold price as the 14-day RSI turns higher above the midline, currently near 57.50.
For a sustained move higher, acceptance above the static resistance at $3,440 is critical.
The next topside target is seen at the two-month highs of $3,453, above which the record highs of $3,500 could be challenged.
If the previous correction resumes, sellers could challenge the previous strong resistance now support at $3,377, the 23.6% Fibo level of the April record rally.
The next downside cushion will be aligned at the 21-day SMA at $3,341 if the $3,350 psychological barrier gives way.
Israel-Iran conflict fuels dip-buy in GOLD as focus shifts to Fed
Gold price is reversing a part of the previous pullback from two-month highs, looking to regain $3,400 in Asian trades on Tuesday. Renewed concerns over the Israel and Iran conflict and trade updates continue to drive the sentiment around the safe-haven US Dollar.
A fresh risk-aversion wave hit Asian markets early Tuesday following reports that US President Donald Trump is leaving the G7 leaders’ Summit early to head back to Washington DC.
Fox News reported that Trump requested the US NSC to be prepared in the Situation Room. This headline added to the risk-off flows as markets began speculating that the US could initiate an offensive operation against Iran, supporting its ally, Israel.
Investors once again scurry for safety in the ultimate store of value, Gold price, while propping the haven appeal of the USD. The renewed USD uptick seems to cap the Gold price rebound.
Further, the bright metal also finds comfort from the news that the US and Japan failed to reach a trade deal on the sidelines of the G7 Summit. Trade uncertainties could act as a headwind to the Greenback, allowing Gold price to sustain the comeback.
Against this backdrop, all eyes turn to the US Fed monetary policy announcements due on Wednesday, with the two-day meeting starting off later on Tuesday.
The Fed is widely expected to keep the fed funds rate unchanged in the range of 4.25%-4.5% this month, with a 60% probability of the Fed lowering the rates in September.
Markets continue to price two 25 basis points (bps) rate cuts by year-end, and therefore, the Fed’s updated economic projections, the so-called Dot Plot chart, will be closely scrutinized alongside Chairman Jerome Powell’s comment to gauge the scope and the timing of the next rate cut.
Any dovish tilt in the Fed’s communication or in the updated forecasts could provide an extra- boost to the non-yielding Gold price while reviving the USD downtrend.
In the meantime, the focus remains on the Bank of Japan (BoJ) policy decision and the US Retail Sales report due later in the day.
The BoJ policy announcements could fuel the USD/JPY pair-driven volatility in the Greenback, eventually impacting the USD-denominated Gold price. But the impact could be limited as Middle East geopolitical headlines and trade updates will likely remain the key market drivers.
Daily technical analysis
Technically, the bullish bias remains intact for Gold price as the 14-day RSI turns higher above the midline, currently near 57.50.
For a sustained move higher, acceptance above the static resistance at $3,440 is critical.
The next topside target is seen at the two-month highs of $3,453, above which the record highs of $3,500 could be challenged.
If the previous correction resumes, sellers could challenge the previous strong resistance now support at $3,377, the 23.6% Fibo level of the April record rally.
The next downside cushion will be aligned at the 21-day SMA at $3,341 if the $3,350 psychological barrier gives way.
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