City Index Market Analyst Fawad Razaqzada says that the increase in risk appetite puts some pressure on gold prices. However, he notes that the precious metal’s weekend gap remains open.
Gold prices typically rise when geopolitical risks increase
cryptokoin.com As you follow from , it made a jump to $1,870 after falling to $1,810. Fawad Razaqzada highlights that gold is still comfortably higher than Friday’s close. As long as geopolitical risks remain high and upcoming US macro indicators trigger fresh selling in the dollar, further gains could be on the way for gold prices, according to the analyst. Razaqzada notes that geopolitical risks, such as the ongoing Israel-Hamas conflict, continue. However, he says gold prices are moderating today, partly due to the recovery in bond yields. In this context, the analyst makes the following statement:
Although gold is not very bright so far today, it could easily find strength again as the situation in the Middle East remains intense. This is why oil prices remain high. Gold typically rises when geopolitical risks increase.
Is gold’s recent rise a ‘dead cat bounce’?
The analyst also says it’s possible bond yields may have peaked. Meanwhile, the stronger-than-expected US employment report on Friday failed to strengthen the dollar further. The dollar continued to fall this week. Therefore, the possibility that the dollar may have formed a top is undoubtedly something many investors are wondering about. Regarding the future effects, the analyst says:
If we see a similar reaction to the data to be released this week (such as FOMC minutes, CPI and UoM consumer sentiment survey), this will further fuel speculation that the worst is over for gold. Gold’s decline of nearly 7% from its September 21 high means prices will see a short-term rally. Therefore, some of the upward move since Friday may just be a short-term bounce. Therefore, one should not get too caught up in the recent upward price movements.
Be on the lookout for more bullish signals for gold prices!
However, Razaqzada remains decidedly bullish on gold’s long-term outlook. According to the analyst, the market has now mostly completed pricing in the Fed’s hawkish interest rates. This means that the downward movement for bonds and therefore gold prices should be limited. “So be on the lookout for more bullish signals to emerge from now on,” the analyst said. says.
Razaqzada also evaluates the fact that spot gold has not returned to Friday’s closing prices. For this, the analyst said, “It must make gold trading uncomfortable. Because generally gaps tend to be filled in assets with high liquidity,” he says. But he warns that this is not always the case. In this regard, the analyst makes the following comment:
I remember a few years ago a gap in EUR/USD that remained unfilled for several months. Although filling a gap will make things a little more comfortable, gold prices may rise for a while, especially if dollar sales gain momentum.
For shiny metal A much better scenario!
Additionally, the analyst also recommends some short-term strategies that could serve investors well in the current market. “One way to look for new trades while the gap remains open is to zoom in on smaller timeframes such as hourly, wait for some consolidation, and then look for long setups when gold prices have risen or are about to rise,” says Razaqzada. He also adds that traders can use short-term price structures as override levels. In this context, Razaqzada concludes:
Frankly, a much better scenario would be for gold to fill its gap and then create new bullish signals to trigger another rally. This can still happen. Additionally, the trigger could be upcoming US data releases, which will undoubtedly move the dollar and bond yields in the direction of surprise.
Critical levels for gold prices
Spot gold continues to hold above $1,857, which Razaqzada said was the first significant short-term resistance level on Tuesday afternoon. The analyst draws attention to the following levels for gold prices:
A slightly lower movement can be understood from here. However, support remains in the long-term area around $1,805 to $1,820 last week before geopolitical risks flared up. This could be a sign that the yellow metal may have formed a low. The next potential resistance level is seen around $1,885. This is followed by $1,900. Also, the latter is the base of the previous breakout. On the downside, the next potential support level is $1,835, Friday’s high.
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