- Weak Dollar Index boost gold prices as holding cost becomes attractive.
- Middle East escalation fears cause surging safe-haven demand for gold.
- Bond yields are flattening, making gold relatively attractive.
- After a sharp fall in prices, oversold conditions attract value buyers.
Market Summary:
After a record high of $5,600, prices witnessed a historical correction that dragged prices to $4400, a jaw dropping $1200 fall.
This strong price correction shed most of the overbought conditions across higher time frames and attracted strong buying intervention at bargain prices, causing a robust demand surge that saw prices rebound to $5090 during the Asian session.
Moreover, fears of Middle East escalations triggered a safe haven buying rush in gold, which got a tailwind from a weak , making holding costs rather attractive in comparison to flattening treasury bond yields.
While macro factors stand in gold’s favour, technical indicators support the continuation of the bullish rebound as well.
Smart money flow shifting from falling crypto portfolio as well as faltering stocks gives gold another traction.
Gold 1 Hour Analytical Chart by www.skcharting.com
Bullish Scenario:
Price stability above 50% Fibonacci retracement from $5600 high and $4400 low indicates the presence of buyers, and a strong breakout above $5090 will lead to quick advance towards next 61.8% Fibonacci zone $5140
If gold attracts enough buying momentum above $5140, the next advance aims 78.6% Fibonacci zone $5340 which is considered a premium zone.
Bearish Scenario:
Consolidation below day high of $5,090 may turn into momentum distribution, and a strong beak below the psychological zone $5000 will put gold under pressure for further correctional retracement towards $4,960-$4,910, below which an extended decline may expose $4890-$4860
Overall Outlook remains bullish, subject to prices holding above $5000
