In the current market scenario, it’s evident that investors are cautiously assessing their positions, with some opting to secure profits. Despite initial expectations, gold hasn’t surged by the anticipated $100-$150 margin.
This can be attributed to the absence of escalated tensions between Israel and Iran, following the recent “attack.” The demonstration of restraint signals a collective aversion to conflict, dampening immediate bullish sentiments for gold. But we can’t forget that XAUUSD has been on an up move since the beginning of this month, recording a stagnant 6.35% up move already.
Looking ahead, the trajectory of gold prices hinges on several factors. The potential for market apprehension to resurface could propel gold upwards by $100-$200, nearing the targeted $2,500 mark. However, a period of retracement seems plausible in the coming weeks, especially considering the Federal Reserve’s hawkish stance on monetary policy. This stands in stark contrast to the European Central Bank’s readiness to act pre-emptively, indicating a divergence in policy tones.
Furthermore, the dynamics of geopolitical tensions play a pivotal role. Should tensions persist or intensify, gold could witness renewed upward momentum. Conversely, a de-escalation could prompt a modest correction in the range of $25-$50. However, breaching the critical support level at $2,320 may precipitate a more pronounced pullback, underscoring the importance of monitoring geopolitical developments.
Looking forward, the outlook for gold remains optimistic, particularly amidst a backdrop of uncertainty and shifting investor sentiment. The allure of gold as a safe haven asset is reinforced by the migration of funds from riskier assets.
Consequently, a target of $2,500 for gold in 2024 appears feasible, aligning with the broader trend towards risk aversion and portfolio diversification.
Market commentary and analysis from Luca Santos, currency analyst ACY Securities
