Gold (XAU/USD) accelerated its rebound on Monday, amid rising geopolitical tensions following the US intervention in Venezuela this weekend. The precious metal is nearly 2.4% up on the day, reaching prices at $4,435 at the time of writing, approaching a previous support area at $4,445.
Venezuelan President Nicolas Maduro is expected to appear in a US federal court on Monday, facing charges of drug and weapons trafficking. Meanwhile, the US President has threatened Mexico and Colombia and said that the US “needs Greenland,” increasing the tensions with Denmark.
Technical Analysis: Indicators show a growing bullish momentum
XAU/USD has bounced up from the area between 61.8% and 76.2% Fibonacci retracement levels and confirmed its recovery, breaking above the $4,400 area (December 30 and January 2 highs). The Moving Average Convergence Divergence (MACD) strengthens in positive territory, suggesting that buyers have taken control. The Relative Strength Index (RSI) stands above the 50 midline.
Bulls might find resistance at the $4,445 area (December 24 lows) ahead of the reverse trendline, now at $4,525. Further up, the record high, at $4,550, will come into focus. Supports are at the mentioned $4,400, previous support, ahead of Friday’s low of $4,310, and the December 31 low, at 4,274.
(The technical analysis of this story was written with the help of an AI tool)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Source: https://www.fxstreet.com/news/gold-price-forecast-xau-sd-might-find-resistance-around-4-445-202601051058
