19 Apr, 2024
Gold (XAU/USD) Analysis
- Gold spiked higher, falling narrowly short of the all-time high
- FX markets captured the flight to safety while US equity markets were shut
- Gold volatility index eyed ahead of the weekend
- Get your hands on the Gold Q2 outlook today for exclusive insights into key market catalysts that should be on every trader’s radar:
Gold Spiked Higher, Falling Narrowly Short of the All-Time High
Uncertainty surrounding the conflict in the Middle East has helped push gold prices higher and higher, nearly testing the all-time high around $2431.
On the daily chart, gold continues to trade within overbought territory but the degree of overheating has been cooling down – suggesting a slow down in bullish momentum within the broader uptrend.
The 1.618 Fibonacci extension of the 2020-2022 move reemerges as support at $2360, with a pocket of higher lows providing an area of further interest around the $2320 level. A strong US dollar and rising Treasury yields have done little to deter the rampant rise in the precious metal as central bank buying continues to add to the tailwind.
Gold (XAU/ USD ) Daily Chart
Gold market trading involves a thorough understanding of the fundamental factors that determine gold prices like demand and supply, as well as the effect of geopolitical tensions and war. Find out how to trade the safe haven metal by reading our comprehensive guide:
While US stock markets were closed, the FX market was on hand to reveal the immediate response as soon as news broke of an Israeli attack on Iran. Traditional safe-haven currencies like the Swiss franc , Japanese yen and US dollar registered gains, while the more risk-aligned (high beta) Australian dollar witnessed the sharpest decline.
AUD has plummeted in recent days due to its historical correlation with the S&P 500 , which is on track for a third straight weekly decline. In addition, Chinese economic prospects remain underwhelming, adding further to the headwinds for AUD.
Immediate Flight to Safety Exhibited in the FX market Overnight
Gold Volatility Index in Focus
The 20-day implied gold volatility (GVZ) index provides a forward-looking measure of gold market volatility, hence its usefulness to investors and traders. Recent volatility has dipped and the focus will be on whether the two nations consider the recent flareup finished or is Iran intends to respond once again.
30-Day Implied Gold Volatility (GVZ)
