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Gold Gleams as Central Banks Pivot

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).