Gold price is currently seeing a slight pullback after a strong sell-off on Friday, likely due to the blowout US Nonfarm Payrolls (NFP) report and Federal Reserve (Fed) Chair Jerome Powell’s comments. Despite this, Gold price remains a ‘buy the dips’ trade, with strong support holding and the daily Relative Strength Index (RSI) staying bullish.
The US Dollar and US Treasury bond yields have been supported by the NFP report and Powell’s remarks, causing Gold price to consolidate on the downside. Additionally, the current market positioning suggests that there is an 85% probability that the Fed will not cut interest rates next month, which is further weighing on Gold.
However, amidst these factors, rising tensions in the Middle East between the West and the Middle East could potentially provide support for the traditional safe haven of Gold. The US Central Command confirmed a strike in self-defense against a Houthi land attack cruise missile, escalating tensions in the region. This geopolitical risk could lead to a rebound in Gold price, although safe-haven flows into the US Dollar may limit Gold buyers.
From a technical analysis perspective, Gold price has managed to close above a critical support level, indicating the potential for a rebound. The 14-day RSI remains above 50, suggesting that a Gold price rebound could be on the horizon. As long as the demand area between $2,030-$2,035 holds up, Gold buyers remain hopeful.
Looking forward, traders will be keeping an eye on the ISM Services PMI and S&P Global final Services PMI data for potential trading impetus on Gold price.
In summary, while current market factors are weighing on Gold price, geopolitical tensions and technical indicators suggest that a rebound could be possible. Traders and investors will be monitoring upcoming economic data and geopolitical developments for further insight into where Gold price may be headed.
