Gold faces resistance as geopolitical tensions drive safe-haven demand
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Gold prices are witnessing modest gains, extending their recovery for the third consecutive day. Geopolitical risks and inflation data are bolstering safe-haven demand, but strong resistance levels and US Dollar strength are capping upside potential. The market now eyes the release of consumer confidence data for fresh momentum.
Gold’s Limited Upside Amid Global Uncertainty
Gold prices are holding onto gains as geopolitical instability and inflationary trends sustain the precious metal’s appeal. Key drivers include ongoing tensions in the Russia-Ukraine conflict and Middle East unrest, which are amplifying market unease. Despite these factors, a positive risk tone and dip-buying in the US Dollar are limiting gold’s momentum.
The Federal Reserve’s hawkish stance, highlighted by a cautious outlook on rate cuts in 2025, has led to elevated US Treasury yields. This development strengthens the non-yielding dollar and creates headwinds for gold’s bullish trajectory. Traders are now focusing on upcoming US consumer confidence data, which could offer fresh direction.
Inflation Data and Market Impact
The recent release of US inflation metrics, as measured by the PCE Price Index, showed marginal increases in headline inflation to 2.4% year-on-year. However, the core PCE Index remained at 2.8%, falling below expectations of 2.9%. Slower growth in personal income and steady consumer spending have added complexity to the outlook, keeping market participants cautious.
Technical Barriers to Gold’s Progress
From a technical perspective, gold’s trajectory is encountering stiff resistance at the 38.2% Fibonacci retracement level near $2,637. A further barrier lies in the $2,643-$2,647 range, aligned with the downward-sloping 200-period Simple Moving Average on the 4-hour chart. A decisive break above these levels could pave the way for additional upward movement, but oscillators suggest caution.
On the downside, immediate support is noted at the $2,616-$2,615 region, corresponding to the 23.6% Fibonacci retracement level. Should prices fall below this zone, the $2,600 psychological level becomes critical, with a potential retest of the recent low near $2,583. A sustained breach could signal deeper losses.
Outlook
Gold’s near-term trajectory remains influenced by geopolitical tensions and inflationary dynamics. However, strong technical resistance and dollar strength suggest that further gains could be limited. Investors are advised to monitor economic data and technical levels closely as the market navigates these uncertain conditions.
Gold’s Limited Upside Amid Global Uncertainty
Gold prices are holding onto gains as geopolitical instability and inflationary trends sustain the precious metal’s appeal. Key drivers include ongoing tensions in the Russia-Ukraine conflict and Middle East unrest, which are amplifying market unease. Despite these factors, a positive risk tone and dip-buying in the US Dollar are limiting gold’s momentum.
The Federal Reserve’s hawkish stance, highlighted by a cautious outlook on rate cuts in 2025, has led to elevated US Treasury yields. This development strengthens the non-yielding dollar and creates headwinds for gold’s bullish trajectory. Traders are now focusing on upcoming US consumer confidence data, which could offer fresh direction.
Inflation Data and Market Impact
The recent release of US inflation metrics, as measured by the PCE Price Index, showed marginal increases in headline inflation to 2.4% year-on-year. However, the core PCE Index remained at 2.8%, falling below expectations of 2.9%. Slower growth in personal income and steady consumer spending have added complexity to the outlook, keeping market participants cautious.
Technical Barriers to Gold’s Progress
From a technical perspective, gold’s trajectory is encountering stiff resistance at the 38.2% Fibonacci retracement level near $2,637. A further barrier lies in the $2,643-$2,647 range, aligned with the downward-sloping 200-period Simple Moving Average on the 4-hour chart. A decisive break above these levels could pave the way for additional upward movement, but oscillators suggest caution.
On the downside, immediate support is noted at the $2,616-$2,615 region, corresponding to the 23.6% Fibonacci retracement level. Should prices fall below this zone, the $2,600 psychological level becomes critical, with a potential retest of the recent low near $2,583. A sustained breach could signal deeper losses.
Outlook
Gold’s near-term trajectory remains influenced by geopolitical tensions and inflationary dynamics. However, strong technical resistance and dollar strength suggest that further gains could be limited. Investors are advised to monitor economic data and technical levels closely as the market navigates these uncertain conditions.