Gold prices (XAU/USD) retreated on Wednesday, following a rally driven by geopolitical tensions and lower interest rate expectations. However, the precious metal remains supported by the ongoing decline in global interest rates and the growing demand for safe-haven assets.
Key Factors Influencing Gold Price:
- Middle East Tensions: The escalation in the Middle East conflict, with Iran launching missiles at Israel, initially boosted gold prices.
- Interest Rates: Falling global interest rates increase the attractiveness of gold as a non-interest-bearing asset.
- Fed Rate Expectations: While the Fed is expected to cut interest rates, the pace of cuts has become less aggressive due to stronger-than-expected economic data.
Analyst Views on Gold’s Outlook:
Several analysts remain bullish on gold’s long-term prospects, citing factors such as lower global interest rates, increased central bank demand, and geopolitical risks. However, there are also concerns about a potential short-term correction due to recent price momentum.
Technical Analysis:
- Gold is currently trading near the 50-day Simple Moving Average (SMA) on the 4-hour chart.
- A break above the $2,673 October 1 high could signal a continuation of the uptrend, with potential targets at $2,680 and $2,700.
- However, a break below the trendline at $2,615-$2,620 would suggest a bearish reversal.