Meanwhile, gold prices continue to rally. They are well clear above the midline on the 14-day Relative Strength Index (RSI). Market analysts note that the gold market is very bullish, fueled by mounting geopolitical tensions and changing economic conditions. Gold buyers are bullish on the market. Key technical levels will play an important role in determining the future direction prices will take.
At the moment, rising geopolitical tensions from Russia’s invasion of Ukraine offer a buffer on any downside movement in gold prices. The ongoing war has pulled back the curtain on a volatile global market. As such, frustrated investors are now turning to gold as the safe-haven alternative. Furthermore, recent developments regarding trade negotiations between the United States and Canada, as well as between the EU and the U.S., have introduced uncertainty, causing gold prices to struggle for an additional upside boost.
Technical Analysis of Gold Prices
Gold prices are actively tracked as they test important gold resistance levels. Buyers get important floor when the 21-day Simple Moving Average (SMA) collides with the 38.2% Fibo retracement at $3,297. This potent combination makes their position in the market even more powerful. Quite frankly, this price point is a place killer in terms of incumbent upward momentum. Continued price action above this threshold would suggest a breakout in bullish activity.
The next major support level is found at $3,297, which will be the line of defense for bulls in a choppy environment. If prices fall below this threshold, sellers will start to try to retake the high ground. A break under the now falling trendline resistance-turned-support currently around $3,322 would create an open breach and likely attract more sellers.
Gold has been undergoing a corrective phase just under the $3,400 level. It is finding it hard to push past the $3,377 resistance zone. Analysts note that for gold to resume its recent upswing, buyers must find acceptance above this critical resistance level on a daily closing basis.
The Impact of Geopolitical Events
Unsurprisingly, geopolitical dynamics can move gold prices significantly. The continuing conflict between Russia and Ukraine continues to be of great concern to traders and investors. Any strong response from Russia would raise the stakes of the new conflict substantially. Increased demand for gold as a protective asset’s the typical consequence History, history…tensions in the world.
Yet recent comments from many of our leaders feed the abyss of doubt. U.S. President Donald Trump remarked, “President Putin did say, and very strongly, that he will have to respond to the recent attack on the airfields.” These statements create additional market fear, driving investors to safe-haven assets – such as gold.
Last year, central banks around the world countered these geopolitical risks by purchasing a record 1,136 tonnes of gold to their reserves. This astounding addition is worth approximately $70 billion. This continued demand from central banks further highlights gold’s long-term attraction in times of economic turmoil.
Market Sentiment and Future Prospects
Though the immediate future holds many challenges for the gold price, buyers continue to feel cautiously positive. Further support is seen around $3,240, where the 50% Fibonacci retracement level meets the 50-day SMA. This advanced new level offers an extra layer of support that can help further strengthen buyer confidence through uncertain economic times.
These lifetime highs for gold prices were $3,500, creating upside targets that traders may have been seeking. Investors are going to be looking at what happens in trade negotiations, war rooms, or OPEC meetings — anything that threatens to destabilize markets.
As market optimism builds that a Trump/Xi communiqué may not be the end of things, the markets continue to respond. If these talks lead to favorable events, that might change the geographic demand for gold, reducing upward price pressure and possibly reducing safe-haven appetite.