Gold Shines Bright Amid Geopolitical Chaos and Trade Policy Jitters

Market Overview

Gold continued the rally far above the $3,300 mark as the new week started. The precious metal hovers near the two-week top as investors flee to safe havens. US trade policies have soured the sentiment, pushing gold higher despite strong US economic data.

Fundamental Analysis

Gold prices reacted to a mix of volatile political, economic, and geopolitical developments. Investors remain wary of President Trump’s unpredictable strategies, especially after he hinted at a trade deal without offering anything specific. His rhetoric keeps markets on the edge despite de-escalating US-China trade tensions.

The US dollar, typically gold’s competitor struggles to gain traction despite economic resilience. The ISM Services PMI surged to 51.6 in April, beating expectations. Moreover, last week’s job data also eased recession fears. These developments lifted greenback but not enough to dent gold’s bullishness.

Geopolitical flare-ups remain a strong catalyst for gold’s buying momentum. Russia accused Ukraine of launching drone attacks on Moscow for second consecutive night which prompted airport closure and military responses. On the other hand, Israel carried out air strikes on Yemen in coordination with the US following an attack on Tel Aviv’s Ben Gurion Airport by Houthis. Both incidents have sparked gold’s safe-haven status.

Moreover, market participants await Federal Reserve’s 2-day FOMC meeting along with Powell’s statement to offer potential future path. Though fears of a rate cut have subsided, any dovish signal could send gold higher.

In short, gold remains resilient amid geopolitical uncertainty, trade policies and fragile global economic outlook. Some headwinds like strong US data and improved risk sentiment could weigh on the gold. However, long-term trend remains strongly bullish with few potential pullbacks.

Technical Analysis

Analyzing the gold chart, we observe bullish momentum with weekly and daily candles pointing upward, nearing the 3400 level. A fake-out is visible on the daily, weekly, and H4 candles, complemented by a well-defined trendline on the M30 chart. Key liquidity is noted around the 3400 mark. If the current H4 candle shifts bullish, it may indicate a liquidity grab at this level, allowing for a potential reversal. While the monthly chart of the past four months remains bullish, a bearish move could emerge if liquidity has been taken. The 3400 zone presents a critical area to monitor for short opportunities.

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