Current trend
This week, the XAU/USD pair rose to the 5419.00 region, corrected to the 5000.00 region (Murrey [8/8]), but has now resumed its rise, reaching 5154.35.
Gold prices are supported by the escalation of the conflict in the Middle East: the Pentagon initially expected the fighting to end within a few weeks, but experts now believe it will take at least 100 days. This means the likelihood of a global economic downturn and rising inflation due to rising hydrocarbon prices is increasing, causing investors to shift capital to safe-haven assets. Experts note that the current situation is generally reminiscent of the escalation of tensions between the US and Iran in 1987, which led to a significant weakening of stocks worldwide.
On the other hand, in the medium term, the positive dynamics of precious metals are limited by monetary factors, as the US Fed may move to maintain current interest rates for a long time or even raise them if inflation accelerates further. Thus, in January, the consumer price index was 2.4%, and the producer price index was 2.9%, significantly exceeding the 2.0% target. Currently, there is no consensus among officials, but most lean toward a “hawkish” stance. The exception is Stephen Miran, appointed to the board by President Donald Trump. Yesterday, on Bloomberg TV, he stated that the risks associated with the standoff in the Persian Gulf region have not changed the need for monetary easing this year, as price pressures, in his view, will continue to decline, and the labor market requires stimulus measures. If the White House succeeds in strengthening its “dovish” stance after the appointment of Kevin Warsh as Fed Governor, gold prices will receive a new long-term positive impetus.
Overall, the preconditions for further strengthening of the XAU/USD pair remain.
Support and resistance
This week, the trading instrument tested Bollinger bands midline at 5000.00 (Murrey [8/8]) and resumed growth toward the yearly highs of 5595.00 or 5781.25 (Murrey [+2/8], H4). However, if the 5000.00 mark is broken, the quotes could decline to the region of 4687.50 (Murrey [7/8]) and 4375.00 (Murrey [6/8]).
Technical indicators maintain a buy signal: Bollinger Bands are pointing upward, the MACD histogram is stable in the positive zone, and the Stochastic is pointing downward, possibly leading to a limited correction.
Resistance levels: 5595.00, 5781.25.
Support levels: 5000.00, 4687.50, 4375.00.