Baxia Markets
May 20, 2024

XAUUSD Advances with New Highs, Targets $2500 Amid Geopolitical Tensions and Fed Speeches

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Gold (XAUUSD) continues its upward trajectory, recently breaking above $2400 and making a new higher high. The precious metal has surged past the 200% Fibonacci extension level at $2438, indicating strong bullish momentum. This breach suggests that prices may disregard this level and aim for the 261.8% Fibonacci extension target between $2450 and $2452.


The key catalyst behind gold’s recent rally is the rising geopolitical tensions in the Middle East. Escalating conflicts in the region have heightened uncertainty, driving investors towards safe-haven assets like gold. Additionally, the ongoing tensions between Russia and Ukraine, marked by reciprocal attacks over the weekend, have further bolstered demand for gold as a secure investment.

XAUUSD Advances with New Highs, Targets $2500 Amid Geopolitical Tensions and Fed Speeches


On Monday, gold traders will closely monitor speeches from several Federal Reserve officials, including Bostic, Barr, Waller, Jefferson, and Mester. These speeches are expected to provide insights into the future path of U.S. monetary policy. The market will be particularly attentive to any cautious or hawkish comments, as such rhetoric could potentially cap the upside for gold by strengthening the U.S. dollar and increasing bond yields.


Analyzing the 1-hour timeframe chart, major indicators point towards continued bullish sentiment. The Ichimoku cloud, a favorite among traders in the East, shows that the Tenkan-sen, Kijun-sen, and Chikou span are all positioned above the cloud, signifying a robust bullish trend. Similarly, the Exponential Moving Averages (EMA), widely used in Western trading, reinforce this sentiment, with the EMA 50 positioned above the EMA 200, indicating strong upward momentum.


However, a note of caution comes from oscillator indicators, particularly the Relative Strength Index (RSI), which has entered the overbought zone. This suggests that resistance may be near. The appearance of several doji candlestick patterns after making new highs during the Asian trading session also indicates potential market fatigue and a possible slowdown in the current bullish run.


Overall, the outlook for XAUUSD remains bullish, with prices likely to reach the $2450 mark in the short to medium term. Despite the overbought signals and the potential impact of upcoming Fed speeches, the strong upward momentum driven by geopolitical tensions and technical indicators suggests that gold’s rally has further to go. Traders should watch for key resistance levels and market reactions to central bank commentary to navigate the next moves in this bullish trend.

Key Takeaways

  1. XAUUSD surpassed $2400, breaking above the 200% Fibonacci extension level at $2438.
  2. Geopolitical tensions in the Middle East and between Russia and Ukraine are driving safe-haven demand for gold.
  3. Upcoming speeches from Federal Reserve officials may influence gold's price movement.
  4. Technical indicators like the Ichimoku cloud and EMAs suggest a strong bullish trend for gold.
  5. Despite overbought signals on the RSI, gold is expected to reach $2450 in the short to medium term.

Key Economic Releases to Watch Today

JPY, Tertiary Industry Activity Index

Actual -2.4% vs Forecast 0.1% vs Previous 1.5%



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