Gold prices (XAU/USD) climbed on Thursday, trading in the upper $2,310s. This surge comes after several central banks signaled a shift towards lower interest rates.
- Rate Cuts Boost Gold: Lower interest rates reduce the opportunity cost of holding non-interest-bearing gold, making it a more attractive investment.
- Geopolitical Tensions Add Fuel: Stalled ceasefire talks between Israel and Hamas, and a worsening situation in Ukraine, are fueling demand for safe-haven assets like gold.
Central Banks Signal Shift:
- Sweden Cuts Rates: The Riksbank became the first major central bank to cut rates in years, reducing them by 0.25% to 3.75%.
- BoE Hints at Future Cuts: The Bank of England (BoE) voted 7-2 to maintain rates, but with a narrower margin compared to the previous meeting, indicating a growing openness to easing.
- Dovish Shifts Elsewhere: The Swiss National Bank (SNB) cut rates in March, and the Reserve Bank of Australia (RBA) surprised markets with a dovish hold. The European Central Bank (ECB) has also signaled an upcoming rate cut.
China’s Economy Bolsters Gold:
- Strong Trade Data: China’s trade data revealed a better-than-expected rise in exports (1.5% YoY) for April, rebounding from a previous decline. This positive economic data from a major gold consumer supports the price.
Technical Analysis: Gold Meets Resistance
- A pullback from Resistance: Gold retraced after encountering resistance at $2,326.
- Support Levels Hold: The 200 and 50-day Simple Moving Averages (SMAs) on the 4-hour chart are currently providing support around $2,310.
- Mixed Signals from MACD: The MACD indicator shows a mild downside bias, but a decisive breakout is needed to confirm a downtrend.
Potential Scenarios:
- Downside Risk: A break below the trading range and the May 3rd low ($2,277) could see gold fall to $2,245 (100% Fibonacci extension of wave A).
- Upside Potential: A decisive breakout above the range ceiling, potentially accompanied by strong bullish candlesticks, could signal a move towards $2,353 (conservative target) or even $2,370.
- Uncertain C-Wave: The potential Measured Move pattern’s C wave might still be unfolding. It could reach the conservative target of $2,286 (0.681 Fibonacci extension) or even $2,245 (100% Fibonacci extension).
