- Gold continues its upward trend, fueled by safe-haven demand amid ongoing conflicts in the Middle East.
- The BRICS summit highlights gold as a viable alternative to the dominance of the US Dollar.
- XAU/USD breaks above the $2,750 psychological level, reinforcing the multi-time-frame uptrend.
Gold (XAU/USD) continues its upward trajectory, entering the $2,750 range on Wednesday and reaching new all-time highs. The rally is primarily driven by investor demand for safe-haven assets amid ongoing conflicts in the Middle East and heightened election uncertainty in the US. With former President Donald Trump and Vice President Kamala Harris neck-and-neck in polls, the potential for a Trump victory raises concerns about geopolitical stability.
Additionally, the BRICS trading bloc is in the spotlight as it begins its 2024 summit, with members like Russia seeking alternatives to the US Dollar. A gold-backed currency is being discussed as a viable option.
However, gains for gold are being tempered by a global bond rout, as investors anticipate a slower decline in interest rates than previously expected. In the US, the Federal Reserve's outlook has shifted from aggressive rate cuts to a more gradual approach. This environment, with elevated interest rates and a strong US Dollar, diminishes gold's appeal as a non-interest-bearing asset.
Safe-Haven Demand Drives Gold Higher
Gold is climbing higher as conflicts in the Middle East persist. Despite hopes for a ceasefire, fighting continues between the Israeli army and groups like Hamas and Hezbollah. The recent death of Hamas leader Yahya Sinwar did not lead to progress in negotiations, and US Secretary of State Antony Blinken's visit has not yielded a ceasefire agreement. Reports indicate Blinken had to take cover in a bunker due to air raid sirens in Tel Aviv.
Further conflict is anticipated as Israel prepares for a potential retaliatory strike against Iran following an Iranian drone incident near Prime Minister Benjamin Netanyahu's residence.
Technical Analysis: Gold's Uptrend
Gold has breached the psychological barrier of $2,750, establishing a strong uptrend across all time frames. Following this milestone, the next target appears to be $3,000.
XAU/USD Daily Chart
On the daily chart, the Relative Strength Index (RSI) is currently overbought, signaling caution for long-holders, as a pullback may be on the horizon. Should the RSI return to neutral territory, it may indicate a deeper correction, prompting long-holders to close positions and consider shorting. Key support levels are at $2,750, $2,700, and $2,685 (the September high).
Despite potential corrections, gold's overall strong uptrend suggests that any pullbacks are likely to be short-lived, with the broader bull trend expected to continue.
