Gold price(XAU/USD) is bouncing back to trade around $2,720 on Thursday after a 1.2% drop the day before. This drop was likely due to investors taking profits. Now, with the continued conflict in the Middle East and growing global tensions, investors are looking to gold again as a safe asset.
News that North Korea may send troops to Russia in support of its war with Ukraine has added to these risks. Additionally, political uncertainty in the U.S. due to the upcoming elections is pushing more people toward gold, seeking safety during turbulent times.
Central Banks Cutting Rates Boosts Gold Price Amid Geopolitical Risks
Gold price is also benefiting from recent moves by major central banks. The Bank of Canada (BoC) cut its interest rate by 50 basis points (bps) on Wednesday. This move has fueled expectations that the European Central Bank (ECB) might also lower rates in December due to weak economic data.
Lower interest rates globally make gold more attractive because gold does not pay interest. With rates expected to keep dropping, gold is becoming a popular option for investors.
However, in the U.S., strong labor market data has changed some predictions. The Federal Reserve (Fed) is now less likely to aggressively cut interest rates, which could impact gold’s future price.
BRICS Summit May Impact Gold Price and Global Geopolitical Risks
Another factor pushing gold prices up is the upcoming BRICS 2024 summit in Kazan, Russia. BRICS nations (Brazil, Russia, India, China, and South Africa) are discussing alternatives to the U.S. dollar, and there is talk of a currency backed by gold. This has made investors more interested in gold as they look for other options besides the dollar.
Technical Analysis: Gold Recovers After a Pullback
After dropping 1.2% on Wednesday, gold quickly rebounded on Thursday. Gold’s trend is still strong, and it is moving upwards across all time frames. The next target is $3,000, a key psychological level.
XAU/USD Daily Chart Insights
The Relative Strength Index (RSI) shows that gold was recently overbought, meaning it might be due for a short-term pullback. However, the overall trend remains positive, and support levels are at $2,750, $2,700, and $2,685. Any correction is expected to be short-lived, with gold’s broader uptrend likely to continue.
In conclusion, gold remains a safe-haven asset as geopolitical risks increase, and central banks lower interest rates. For the latest updates and insights, visit the Daily Gold Signal for more in-depth market news.
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