XAU/USD, the world’s most-traded gold contract, jumped to a fresh all-time high on Thursday. This increase was notable even against the backdrop of a sustained upward trend in global stock markets. Following a dip to $4,756 on Wednesday, the shiny money illustrated remarkable fortitude. It quickly bounced back to recent highs, punctuating its bullish momentum with a high five. This recent boom occurs against the backdrop of a number of other major global geopolitical and economic changes. In particular, an unusual outline agreement between the U.S. and NATO on Greenland and a positive surprise with the third quarter U.S. GDP revision to 4.4%.
One thing that stands true from the recent rally in gold prices is the increased demand for safe-haven assets. This trend has persisted as uncertainties still loom in the global economy. Investors are piling into gold to shield themselves from worse market turmoil ahead. This trend continues even as the U.S. economy is sending signals of strength, as underscored yesterday by an upgrade to GDP growth. Despite improved market sentiment reflected in global indexes, XAU/USD managed to break previous records, highlighting its appeal in uncertain times.
From the technical perspective, XAU/USD is currently well above all bullish moving averages, further validating its bullish sentiment. The 20-day Simple Moving Average (SMA) is at $4,534.57 offering significant dynamic support for the crypto asset. Currently, XAU/USD holds above the 20 SMA at $4,780.64, which offers nearby support levels as traders navigate through market fluctuations.
The daily chart does an even better job of laying out the bullish case for XAU/USD. The 100 simple moving average is a strong support at $4,558.68. This level serves as additional cushion for the gold price. The Momentum indicator continues to stay high above its midline, stretching its positive push into extreme territory. This shows there exists ongoing strong buying interest, which points to further upside potential for gold prices.
Moreover, the RSI is around 79 for XAU/USD, not indicating upward exhaustion yet. That means that even if prices are dramatically high, there still isn’t any clear warning sign of a turn in the tide. Traders need to be careful but these technical indicators are useful to get a read on where price action may go next.
Underlying this swing in market sentiment are the implications of the recent U.S.-NATO accord on Greenland. This can be a key driver of investor sentiment, with investors always looking for safe havens in times of turbulence. While far from perfect, the framework agreement deal has the potential to establish a more predictable geopolitical landscape. Yet, gold continues to attract investors looking for a safe haven investment.