Gold Futures Reach Record High
As of 4:46 PM EDT, the most active June contract of gold futures is fixed at $2360.70 down $30.40, or -1.27%%. Gold futures also traded to a high of $2448.80 today, their highest level in history.
The latest leg of this rally began on March 25 when gold futures opened at $2189.30. Including today there were only three trading days in which June gold closed below the previous close. What would follow would be a spectacular parabolic move taking June gold to today’s high of $2448.
Market Dynamics
Concurrently, the dollar has been exceedingly strong since Wednesday, April 10. The dollar index opened just above 104 on Wednesday and after factoring in today’s gains of 0.69% the dollar index is currently fixed at 106.075. Overall, the dollar has been moving higher since the low of 102.35 which occurred on Friday, March 11.
U.S. Treasury yields traded lower today, with the ten-year note down 10.2 basis points taking its current yield to 4.493%, and the two-year U.S. Treasury note falling by 9.7 basis points taking the yield to 4.877%. U.S. equities were also lower on the day.
Geopolitical Concerns
Although gold futures declined today, there are still strong geopolitical concerns. Fears of Iran retaliating in response to an Israeli attack on its Syrian Embassy this month are at the forefront of these concerns. The attack on Iran’s embassy killed senior members of the country’s military. It was reported that the United States has issued a warning for travel to Israel, fearing an imminent large-scale attack on the country.
The most recent strong upside move in gold was based on three major factors. First, recent reports by the World Gold Council have revealed that central banks globally have been adding to their gold reserves. Secondly, the anticipated rate cuts that the Federal Reserve has announced would have a positive influence on gold. Lastly, geopolitical concerns about conflict in the Middle East as well as the Russia–Ukraine conflict.
These factors are still very much on the minds of market participants. This means that today’s selloff was a signal that gold prices had moved up too much too quickly, and were likely predicated on profit-taking by shorter-term traders.
Technical Analysis
That being said, the current resistance based on the 23.6% Fibonacci retracement is at $2385.80. Minor support is at $2346.50, the 38.2% Fibonacci retracement, with major support at $2314 based upon a 50% retracement from $2179.90 to today’s high of $2448.80.
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Wishing you as always good trading,
Gary S. Wagner
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
Insight: With gold prices reaching historic highs amidst strong geopolitical concerns and market dynamics, traders should consider the technical aspects of the market, including Fibonacci retracement levels, to make informed trading decisions. The recent pullback in gold prices could be attributed to profit-taking by short-term traders and may present buying opportunities for long-term investors. Additionally, the influence of central banks, Federal Reserve policies, and geopolitical tensions on gold prices should be closely monitored for future price movements.
