Gold prices jumped by over 3% this week. The commodity is on track for its strongest weekly advance since the first week of April. Safe-haven buying and a weakening U.S. dollar are fueling the bullish momentum. This trio of circumstances has gold investors drinking from a golden fountain of opportunity. By Friday morning, that picture had changed, with gold prices returning to positive form and trading near a two-week high hit on Thursday.
On Friday’s Asian session gold remained above the key $3,300 level, a clear indication of sustained bullish interest from investors. This rally comes after yesterday’s deep pullback, a sign of an impressive bounce back from dip-buyers who took advantage of the drop. Analysts are imagining an upward trajectory for gold prices. This sharp growth is due to a combination of economic and geopolitical factors.
The recent rally has highlighted important technical levels that may impact future directionality. The 50% retracement level for gold prices stands at the $3,232 neighbourhood. The 200-period Simple Moving Average (SMA) on the 4-hour chart is offering an important support. A confluence of support lies around the $3,260-$3,258 vicinity, which features the 38.2% Fibonacci retracement level. Such a move would be expected to face strong support, given how major a move below the $3,300 threshold would be after a prolonged period within this range.
Market analysts caution that if gold prices decisively break below this pivotal point, it could trigger further declines toward the 50% retracement level. Conversely, should gold prices continue to show strength and breach the overnight swing high around the $3,346 area, this behavior would reaffirm a constructive outlook for the commodity.
The $3,400 threshold psychological level remains the other major target gold prices could soon be facing if they regain it. Current oscillators on daily and hourly charts are still in positive territory, indicating bullish sentiment among traders.
The stage for gold’s recent performance is set against the tunes of multiple economic worries. Combined U.S. fiscal challenges, compounded by a sudden and unexpected turning of the tide in U.S.-China trade relations, are frightening investors. Consequently, more and more investors are rushing towards safe-haven assets such as gold. These are all factors propping up higher prices as investors continue to look for safety in the face of uncertainty.