Gold prices rose to a five-day high, surpassing $2,400, because of tensions between Israel and Iran in the Middle East. An Israeli attack on Iran on Friday pushed the price of gold up to $2,417 per troy ounce as people sought safety in uncertain times. However, this increase didn’t last long because Iran said it didn’t plan to retaliate.
Currently, the price of gold is at $2,394, which is a 0.70% increase. This rise comes despite recent comments from Federal Reserve officials suggesting they might not lower interest rates soon, as they believe inflation isn’t going down as expected.
On Friday, Chicago Fed President Austan Goolsbee said that inflation progress had stopped and that the Fed’s current policy, which aims to control inflation, is appropriate. Other Fed officials like Bostic and Williams also made similar comments earlier in the week, indicating that they might not reduce rates until the end of the year.
Daily Digest Market Movers: Gold Rises Amid Risk-Off Sentiment Despite Hawkish Fed Commentary
This week, gold prices were supported by worries about the conflict in the Middle East after Iran attacked Israel. Gold is set to gain over 2.25% for the week.
The interest rates on 10-year Treasury bonds rose by 8 basis points this week, reaching 4.615%. Real yields in the US also increased by the same amount and are expected to end the week near 2.215%.
Key data this week included strong US Retail Sales figures, which led to a reassessment of interest rate expectations set by the Federal Reserve. This caused the yield on 10-year US Treasury notes to reach 4.696%, the highest level since November 2023.
Despite some weaknesses in the housing market, solid Industrial Production data for March and better-than-expected job figures, including lower Initial Jobless Claims, were reported.
Raphael Bostic from the Atlanta Fed mentioned that inflation is still too high and that the Fed won’t be able to lower rates. New York Fed President John Williams said the Fed is watching the data closely and that monetary policy is in a good position. He indicated that while he doesn’t foresee raising rates, the Fed will if necessary.
According to the CME FedWatch Tool, the first rate cut could happen in September, with a 67% chance of a quarter percentage point cut.
The US Dollar Index, which measures the dollar against other currencies, slightly decreased to 106.15.
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Technical Analysis: Gold Rises as Risk Aversion Grows, Buyers Lose Momentum
The price of gold has been going up, but it looks like buyers might be slowing down. The recent increase on Friday to $2,417 happened because people were worried about risks in the market. The Relative Strength Index (RSI), which measures how strong the buying or selling pressure is, is still high, but it hasn’t gone higher than before. This suggests that there’s a small difference between how much the price is going up and how strong the buying pressure is. This could mean that the price might drop a bit, but it’s more likely that the upward trend will continue.
If the price keeps going up, the first level it might reach is $2,400, then Friday’s high of $2,417, and if it goes beyond that, it could reach the highest price ever at $2,431. However, if the price starts to go down, the first level of support, or where the price might stop falling, would be around $2,350, followed by the lowest price on April 15 at $2,324. If it goes below that, it might go down to $2,300.
