GOLD rebounds as Middle East war escalates, but not out of woods yet
Gold rebounds from critical support line early Friday, as profit-taking creeps in following a down week.
The US Dollar stalls Thursday’s steep slide after hawkish central bank decisions worldwide.
Gold defended the critical 100-day SMA at $4,605 on Thursday, but bearish bias still prevails.
Gold is replicating the recovery moves seen in Thursday’s Asian trades, as buyers jump back in at lower levels early Friday after defending the critical $4,600 demand area.
Gold is reversing a small portion of the roughly 7% loss incurred so far this week, as sellers take a breather before the next push lower.
The bright metal accelerated declines on Thursday, even though the USD succumbed to the heavy selling pressure induced by impressive gains in the Euro and the Japanese Yen , following their respective monetary policy decision.
After the US Federal Reserve held the key policy rate steady on Wednesday, the Bank of Japan , the Bank of England, and the European Central Bank also followed suit, signalling caution amid risks of energy-driven inflation shock as the Middle East conflict intensifies.
Investors remained wary over no end in sight to the war, especially after Israel targeted Iran’s energy infrastructure in the Gulf region and Iran retaliated with force to those attacks. Gold was heavily sold to cover losses elsewhere as risk aversion remained at full steam.
Markets also began pricing out interest rate cuts by the world’s major central banks this year, adding to the negative risk sentiment around non-yielding assets such as Gold.
In Friday’s trading ahead, Gold could build on its recovery mode from six-week troughs of $4,503 as traders will likely unwind their short positions heading into the weekend and before next week’s global business PMI data.
The end-of-the-week flows will also influence the Gold price action as a blockbuster central bank week draws to an end and the Middle East turmoil drags on.
Daily technical analysis
The near-term bias is neutral with a mild bearish tilt as price has slipped below the 21-day SMA near $5,080 and the 50-day SMA around $4,980, breaking the prior short-term upward structure while still holding well above the rising 100- and 200-day SMAs, which anchor a broader uptrend. The 21-day SMA has started to roll over while price accelerates away from it on the downside, indicating fading upside momentum. The RSI at 35.66 stays below the 50 midline but above oversold territory, reinforcing a corrective, rather than impulsive, downside phase within a longer-term bullish context.
Immediate resistance emerges at the 50-day SMA around $4,980, with the 21-day SMA near $5,080 as the next upside hurdle if buyers attempt a rebound. A daily close back above this zone would improve the short-term outlook and expose the recent highs near $5,330. On the downside, initial support sits at the recent swing low close to $4,650, with a break below this level opening the way toward the rising 100-day SMA now near $4,610. As long as price holds above the 100-day and 200-day SMAs cluster, the broader bullish structure stays intact despite current downside pressure.
GOLD rebounds as Middle East war escalates, but not out of woods yet
Gold is replicating the recovery moves seen in Thursday’s Asian trades, as buyers jump back in at lower levels early Friday after defending the critical $4,600 demand area.
Gold is reversing a small portion of the roughly 7% loss incurred so far this week, as sellers take a breather before the next push lower.
The bright metal accelerated declines on Thursday, even though the USD succumbed to the heavy selling pressure induced by impressive gains in the Euro and the Japanese Yen , following their respective monetary policy decision.
After the US Federal Reserve held the key policy rate steady on Wednesday, the Bank of Japan , the Bank of England, and the European Central Bank also followed suit, signalling caution amid risks of energy-driven inflation shock as the Middle East conflict intensifies.
Investors remained wary over no end in sight to the war, especially after Israel targeted Iran’s energy infrastructure in the Gulf region and Iran retaliated with force to those attacks. Gold was heavily sold to cover losses elsewhere as risk aversion remained at full steam.
Markets also began pricing out interest rate cuts by the world’s major central banks this year, adding to the negative risk sentiment around non-yielding assets such as Gold.
In Friday’s trading ahead, Gold could build on its recovery mode from six-week troughs of $4,503 as traders will likely unwind their short positions heading into the weekend and before next week’s global business PMI data.
The end-of-the-week flows will also influence the Gold price action as a blockbuster central bank week draws to an end and the Middle East turmoil drags on.
Daily technical analysis
The near-term bias is neutral with a mild bearish tilt as price has slipped below the 21-day SMA near $5,080 and the 50-day SMA around $4,980, breaking the prior short-term upward structure while still holding well above the rising 100- and 200-day SMAs, which anchor a broader uptrend. The 21-day SMA has started to roll over while price accelerates away from it on the downside, indicating fading upside momentum. The RSI at 35.66 stays below the 50 midline but above oversold territory, reinforcing a corrective, rather than impulsive, downside phase within a longer-term bullish context.
Immediate resistance emerges at the 50-day SMA around $4,980, with the 21-day SMA near $5,080 as the next upside hurdle if buyers attempt a rebound. A daily close back above this zone would improve the short-term outlook and expose the recent highs near $5,330. On the downside, initial support sits at the recent swing low close to $4,650, with a break below this level opening the way toward the rising 100-day SMA now near $4,610. As long as price holds above the 100-day and 200-day SMAs cluster, the broader bullish structure stays intact despite current downside pressure.
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