New York, NY – Gold prices saw a weekly advance but closed below the record high of $2,430 reached briefly on Friday during the New York session. The metal has shown strength in recent weeks, climbing more than 17% since mid-February and defying the typical negative relationship with U.S. real yields. Despite a strong U.S. dollar and hawkish U.S. interest rate expectations, gold has continued its rally, puzzling traders.
Geopolitical tensions in the Middle East have also supported gold prices, with concerns rising over potential retaliation from Iran against Israel after an attack on its embassy in Syria. This escalation could lead to wider regional conflict, further boosting demand for the precious metal.
Several factors may explain gold’s impressive performance this year. Speculative frenzy and trend-following behavior could be driving prices to unsustainable levels, potentially leading to a sharp correction in the future. Some market participants are hedging against an economic downturn caused by aggressive monetary policy tightening, while others are betting on a resurgence in inflation that could benefit precious metals.
While the momentum-driven explanation for gold’s rally seems compelling, historical trends caution against unsustainable speculative fervor. The timing of any reversal remains uncertain, but sentiment shifts could trigger a downward correction in the future.
On a technical analysis front, gold set a new all-time high near $2,430 before retracing to close at $2,344. Support levels are seen at $2,305, $2,260, and $2,225, while resistance is expected at the record high. Market dynamics suggest that gold may struggle to break past the $2,430 barrier, but a breakout could propel prices towards $2,500.
The gold market remains unpredictable, with various factors influencing its trajectory. Traders are advised to stay informed and monitor key support and resistance levels to make informed trading decisions.