Gold price soars amid geopolitical tensions, hawkish Fed remarks

■  Gold remains lifted by geopolitical risks amid sharp rise in US Treasury yields.

■  Federal Reserve officials emphasize ongoing inflation concerns, hinting at maintaining higher interest rates for longer.

■  Strong US labor market data reinforces robust economic backdrop.

Gold prices advanced late in the North American session on Thursday, underpinned by heightened geopolitical risks involving Iran and Israel. Federal Reserve (Fed) officials delivered hawkish messages, triggering a jump in US Treasury yields, which boosted the Greenback.

XAU/USD trades at $2,384, with gains of more than 1%, after hitting a daily low of $2,361. Major central bank speakers are grabbing the spotlight, pushing aside the release of economic data from the United States (US), which paints an optimistic outlook for the labor market.

On Thursday, Fed policymakers crossed the wires. Atlanta Fed’s Raphael Bostic noted that inflation is too high, and the US central bank still has a way to go to tame it. He added the Fed won’t be able to reduce rates. Earlier, New York Fed President John Williams stated that the Fed is data-dependent and emphasized that monetary policy is in a good place, so he wasn’t in a rush to cut rates. His baseline doesn’t consider hiking rates but added that the Fed will hike if needed.

Following Bostic’s remarks and strong data that showed US Initial Jobless Claims remained unchanged compared to the previous reading, the golden metal continued to climb.

Daily digest market movers: Gold shrugs off higher yields, strong US data

The US Department of Labor revealed that Initial Jobless Claims for the week ending April 13 fell to 212K, below the predicted 215K. Continuing Jobless Claims for the week of April 6 slightly rose to 1.812 million from 1.810 million but were still below the expected 1.818 million.

The Philadelphia Fed Manufacturing Index increased significantly, jumping to 15.5, far surpassing minimal forecasts of 1.5. US Existing Home Sales declined by 4.3% MoM, falling from 4.38 million to 4.19 million, which was also below the anticipated 4.2 million.

In the meantime, the CME FedWatch Tool shows the first rate cut could happen in September, with odds for a quarter percentage point cut standing at 66%, down from yesterday’s 71%.

Despite decent US economic data, market participants seem to be focused on geopolitical risks.

Tensions in the Middle East subsided after Israeli officials commented that they considered striking Iran on Monday but decided to wait, according to Axios. Jake Sullivan, the White House National Security Advisor, said the US decided to impose new sanctions on Iran in the upcoming days.

US Dollar Index (DXY), which tracks the buck’s performance against a basket of six other currencies, loses 0.15% to 105.96.

Gross Domestic Product (GDP) estimates for Q1 2024 show that the US economy is expected to grow 2.9%, up from 2.8% estimated on April 15, according to the Atlanta GDPNow model.

Technical analysis: Gold rises despite RSI in overbought levels

The Gold price remains bullishly biased, and price action of the last couple of trading days appears to form a Bullish Harami chart pattern that reassembles an inside day. That suggests the non-yielding metal could resume its uptrend, even though the Relative Strength Index (RSI) is at overbought levels. That said, buyers need to challenge the $2,400 figure. Once cleared, that could pave the way to test the year-to-date (YTD) high at $2,431.78, ahead of $2,500.

On the other hand, if XAU/USD is headed for a correction, the first support would be the $2,350 mark, followed by the April 15 daily low of $2,324. Once surpassed, Gold might test $2,300.