Gold Price Consolidates Before the Next Assault on $2,700?

The Gold price consolidated last week as geopolitical tensions abated somewhat on no further escalations, but sellers are still nowhere to be seen, so the dips were pretty shallow. This shows that we will likely see further upside momentum in XAU/USD, as soon as risks increase.

Gold prices have been on the rise in 2024, driven by a mix of political, geopolitical, and economic concerns that have sustained demand for safe-haven assets like gold. In the U.S., the upcoming presidential elections add a risk premium, while escalating tensions in the Middle East have further dampened risk sentiment. Globally, economic weakness has also pushed investors toward gold, though recent Chinese stimulus efforts may provide some relief to the world economy.

Gold reached a peak of $2,685.69 on September 26, but by last Monday, it had slipped to $2,624. Despite this dip, the 50 SMA on the H4 chart continued to provide strong support. Renewed tensions in the Middle East caused XAU/USD to rally again, though it couldn’t set a new high and subsequently reversed lower. The pattern of rising lows and declining highs is creating a triangle formation in gold’s price movement, as traders continue to buy on dips due to ongoing uncertainties.

Gold Chart H4 – A Triangle Is Forming

Gold’s rally has also been fueled by the Federal Reserve’s monetary easing, alongside similar measures by other major central banks and China’s recent stimulus initiatives. Middle East unrest is likely to persist, which could keep risk sentiment negative and gold in demand. Additionally, any disruption to oil production and transportation in the region could rekindle inflation worries, further boosting gold, which tends to thrive during periods of high inflation.

Gold Holds Gains Despite Strong NFP Report

On Friday, the U.S. reported a gain of 254,000 new jobs in the September non-farm payrolls, a substantial increase from under 100,000 in August. Employment figures were generally high throughout last week, which has lessened the likelihood of a 50 basis point rate cut by the Federal Reserve at its November meeting. Such strong job data typically boosts the U.S. dollar, which often puts downward pressure on gold prices. However, the dip in XAU was brief, and it quickly bounced higher in late US session.

Gold’s resilience, despite a stronger dollar, highlights the ongoing demand for it as a safe-haven asset amid economic uncertainties. This market behavior suggests that gold could surpass the $2,700 mark if tensions rise again, driven by consistent demand for safe havens in uncertain times.

Gold Live Chart