In the last few days, the conflict in Israel has lifted demand for safe assets, supporting a rebound in the gold price. Moreover – despite US inflation coming in above expectations – we have registered some comments with dovish tones from policy makers.
For example, Fed member Collins affirmed that the persistent increase of yields registered in bonds could reduce the need of further restrictive measures. As a consequence of this scenario, the gold price extended its rebound, returning to $1,920 an ounce, while the price in dollars per gram jumped to $62.
We should also note that tensions in the Middle East, apart from boosting the demand for risk-off assets, are also increasing hopes that the U.S. Central Bank will not raise interest rates in the two final meetings scheduled for this year. In other words, there are growing chances that the peak has been reached.
Looking at the chart, gold has completed a “V”, returning to levels seen on the 20-21st September, before the sell-off pulled prices down to $1,820.
Overall, this recovery appears extremely quick, confirming markets appetite for bullion. On Friday we have seen the biggest daily gain since March, with the spot price jumping by over 3%. Technically the recovery to $1,900 is positive and the price is now playing with the resistance zone of just above $1,930.
The fast-paced rally of the last few days could open doors for some profit-taking (particularly from traders who bought gold on its dip just ten days ago), increasing chances of a lateral consolidation phase between $1,890 and $1,950.
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