This pushed gold prices to close last Friday at $3,307—clearly breaking above the 21-day Simple Moving Average (SMA). This was a welcome relief after a major sell-off earlier this week. This sell-off had pushed gold prices to their lowest level in five days, just below $3,250. Geopolitical tensions, including the Russia Ukraine war and Chinese relations, have played a major role in driving this precious metal market. To complicate matters further, we now have the recent return of Donald Trump as the 47th US President.
In a world of increasing economic uncertainty, gold remains a refuge for investors. A firm breakout above the $3,433 level might trigger a new rally toward the former record high at $3,500. In the meantime, market analysts continue to raise alarms. They further caution that should the daily candlestick print below the 21-day SMA currently at $3,313, it would trigger bearish sentiments and start a downtrend to the 50-day SMA at $3,138.
Geopolitical Tensions Impacting Gold Prices
Gold prices continue to get key bids on escalating geopolitical tension between India and Pakistan. They’re strengthened by the continuous havoc wreaked due to the Russia-Ukraine war. In the past, when investors have felt the tension, they have flocked to gold. They view it as a safe-haven asset when uncertainty rears its head.
Recent news shows just how intense these conflicts are becoming. Photo Bloom Production, Flickr
An assurance from the Indian side
On the Indian side, Gen. In response, they released a joint “hotline message” regarding administration operations along the border. At the same time, a senior military spokesman for Pakistan acknowledged that combat operations continued. Each of these occurrences adds to the general mood of uncertainty that so often brings gold’s alluring qualities to a boil.
“autos, agriculture, airplane parts are all separate from security matters.” – Shigeru Ishiba
As global tensions increase, so does the need for strong international leadership. Market participants are eyeing closely how these geopolitical issues will affect gold’s performance in the weeks ahead.
The Resurgence of US-China Trade Tensions
Donald Trump’s potential return to the White House has rightfully raised alarms. Many observers are concerned that current trade frictions between the United States and China may spiral out of control. As part of his campaign for re-election in 2024, Trump has already hinted at raising tariffs on Chinese imports up to a staggering 60%. This is a major turning point in the US-China relationship. Relationship between the two countries have been strained since Trump rolled out trade barriers in 2018.
This U.S.-China trade war started in March 2018 when Trump claimed China had been stealing U.S. commercial practices and intellectual property. The wait for relief The Phase One trade deal signing in January 2020 provided only momentary calm. Further tariff exchanges between the U.S. and Europe have put this deal’s strength into question.
Given these encouraging signs, optimism is growing that the two countries will soon be able to strike a more complete trade agreement. Last month, the retaliatory tariffs spread almost ground international commerce between the two economic superpowers to a halt. This latest incident highlights how precarious their relations truly are.
Market Outlook for Gold Prices
As investors and analysts continue to evaluate gold’s direction, all eyes are focused on notable resistance and support levels. A continuation higher past $3,433 might retest the falling trendline resistance at approximately that same price. If gold prices cannot hold above the 21-day SMA, they may fall back and retest the May 1 low at $3,202. Keep your eyes peeled on this possible downtrend!
The 14-day Relative Strength Index (RSI) is likewise flashing warning signs of a change in market sentiment. As it floats around the midline, analysts caution it could flip bearish any day if selling pressure persists.
“a hotline message” – A top Indian army officer said