Gold Paused Amid Geopolitical Tensions

Gold paused amid geopolitical tensions
.15 Apr 2024
author avatar image Andreas Thalassinos

Table of Contents

Briefing 

  • Title: Gold Paused Amid Geopolitical Tensions
  • Financial instrument: Gold
  • Timeframe: Daily
  • Session: London
  • Trend: Up
  • Trend Confirmation: Exponential Moving Average(EMA), Moving Average Convergence/Divergence(MACD), Relative Strength Index (RSI), Momentum
  • Momentum: MACD above its Signal Line
  • Divergence: Negative divergence between price and RSI
  • Support Levels: 2287.10, 2230.73, 2158.56
  • Resistance Levels: 2415.64, 2487.81, 2544.18
  • Trading Strategy: Buy on Breakouts, Buy on Dips

High Impact Economic Events

  • Monday, 12:30 pm (GMT+0): Retail Sales m/m (USD)
  • Tuesday, 02:00 am (GMT+0): Industrial Production y/y (CNY)
  • Thursday, 06:00 am (GMT+0): Claimant Count Change (GBP)
  • Tuesday, 12:30 pm (GMT+0): CPI (CAD)
  • Tuesday, 10:45 pm (GMT+0): CPI (NZD)
  • Wednesday, 06:00 am (GMT+0): CPI y/y (GBP)
  • Thursday, 01:30 am (GMT+0): Unemployment Rate (AUD)
  • Friday, 06:00 am (GMT+0): Retail Sales m/m (GBP)

Trend Analysis – Gold Paused Amid Geopolitical Tensions

Gold price chart surging with potential support and resistance levels.

The price of Gold has exhibited a significant upward move since February 15. After reaching a daily low of 1984.16, the price rebounded to form a technical reversal to the upside, commonly referred to as a Morning Star. This reversal pattern was followed by a series of bullish candlesticks, which paved the way for an upward trajectory. During this period, the bulls were able to pull the price higher to an all-time high of 2431.45. Friday’s close completed a streak of four bullish weeks in a row.  

This recent price action suggests a bullish sentiment in the market with an imminent sideways direction underway. These developments indicate that further upward momentum may be in store for Gold.  

Indicators and Oscillators Analysis 

The Relative Strength Index (RSI) fell below the 70 extreme levels, indicating the possible sideways direction or correction for the precious metal. However, traders should exercise caution, as RSI alone may not be a reliable indicator. Additionally, the Bollinger Bands suggest widening volatility as the Upper and Lower Bands diverged. At the same time, the Middle Band serves as immediate support to any potential downside correction. The Exponential Moving Average and the Moving Average Convergence/Divergence (MACD) also confirm the upward movement. In particular, prices are trading above the Moving Average line, and MACD is above the zero baseline. Additionally, the Stochastics crossed above the extreme overbought level and subsequently moved below the 80 zones. Moreover, the MACD oscillator indicates a bullish momentum, with the MACD above the Signal line. 

Key Support Levels 

In the current market scenario, the bulls hold the reins of Gold, and the price of precious metal will likely continue to rise. The initial support level is seen at 2287.10, and a further decline may lead to a breach of this level. If t this happens, the next support level at 2230.73 could come into play. The violation of this level may indicate further potential for a downturn, and the next significant support level is estimated to be 2158.56. It is crucial to closely watch these support levels to gauge Gold’s future direction.

S1–>2287.10

S2–>2230.73

S3–>2158.56

Key Resistance Levels 

If the bulls maintain control of the market, a potential positive momentum to the upside may yield gains in the future. However, resistance is likely to arise at various levels. The initial resistance level is estimated to be approximately 2415.64; subsequently, resistance is projected to be witnessed at 2487.81 and 2544.18, respectively. These levels of resistance could pose a challenge to the market’s upward momentum. Nonetheless, with careful consideration of market trends and strict risk management tools, it is possible to navigate these obstacles and mitigate risks.

R1–> 2415.64

R2–> 2487.81

R3–> 2544.18

Trading Strategy for Gold

Based on the technical analysis, traders may consider adding to their positions above the recent high of 2415.64, which was marked on April 12. On the other hand, aggressive traders may explore short-term buying opportunities on dips toward the support level and the Middle Band, with tight stop-loss orders to manage risk effectively. Additionally, if the bullish momentum persists and candlesticks continue to close above the Upper Bollinger Band, indicating a continuation of the uptrend, traders may take advantage of the rising prices with long positions.

Conclusion

In conclusion, the technical analysis of Gold suggests a bullish outlook that may continue as upward momentum persists. On the other hand, a possible pause for a sideways market is on the table amid geopolitical tensions. Traders should closely monitor price action around key support and resistance zones and relevant technical indicators to identify potential trading opportunities and manage risk effectively in the current market environment. 

author avatar image
Andreas Thalassinos

Experienced educator with a demonstrated history of working in the financial services industry. Skilled in Technical Analysis, Market Risk, Asset Management, Stock Market, and Trading Systems. Strong professional with a MSTA by Society of Technical Analysts (UK), CFTe and MFTA focused in Master of Financial Technical Analysis from International Federation of Technical Analysts (USA).