Gold's Spectacular Record-Breaking Ascent

Andreas Thalassinos
Andreas Thalassinos

04.4.2024

Yesterday's trading session saw the price of Gold closing at 2297.55 US Dollars per troy ounce, surpassing the previous all-time high and setting an unprecedented record of eleven all-time highs in 2024 alone.  This surge in value can be attributed to several factors, including the recent retracement of the US Dollar, ongoing geopolitical uncertainty, mounting inflationary pressure, and the potential for an extended period of high interest rates. 

Overview

Yesterday's trading session saw the price of Gold closing at 2297.55 US Dollars per troy ounce, surpassing the previous all-time high and setting an unprecedented record of eleven all-time highs in 2024 alone. This surge in value can be attributed to several factors, including the recent retracement of the US Dollar, ongoing geopolitical uncertainty, mounting inflationary pressure, and the potential for an extended period of high interest rates. 

It is important for traders to closely monitor the price trends of the precious metal especially in light of the forthcoming release of significant economic data that could impact the direction of Gold prices in the market. 

 Upcoming Economic Events

Thursday, 06:30 am (GMT+0): CPI m/m (CHF)

Thursday, 12:30 pm (GMT+0): Unemployment Claims (USD)

Friday, 12:30 pm (GMT+0): Employment Change (CAD)

Friday, 12:30 pm (GMT+0): Unemployment Rate (CAD)

Friday, 12:30 pm (GMT+0): Average Hourly Earnings m/m (USD)

Friday, 12:30 pm (GMT+0): Non-Farm Employment Change (USD)

Friday, 12:30 pm (GMT+0): Unemployment Rate (USD)

Fundamentals

The US ISM Manufacturing Index displayed a strengthening trend in March, registering a value of 50.3. This reading surpassed the previous month's value of 47.8, marking an improvement in the manufacturing sector. The value stood above the expected consensus forecasts of 48.5, indicating a positive trend in the manufacturing industry. This current reading is the highest recorded value since October 2022, highlighting the upward momentum in the manufacturing industry.

The US ISM Manufacturing Index is one of the most reliable economic indicators. It provides guidance to supply management professionals, economists, analysts, and government and business leaders. A reading above 50.0 indicates industry expansion, while below indicates contraction.

The Private Sector added 184,000 Jobs in March as per the ADP National Employment Report released on April 3. The report provides an independent measure and high-frequency view of the private-sector labor market based on actual, anonymized payroll data of more than 25 million US employees. Also, the annual pay witnessed a growth of 5.1 percent year-over-year.

The Institute for Supply Management (ISM) has reported a slowdown in the growth of the US services industry during March, accompanied by a measure of prices paid by businesses for inputs dropping to a four-year low. The non-manufacturing PMI recorded a decline from 52.6 in February to 51.4 last month. This marks the second consecutive monthly decrease in the index since January's rebound. The services industry, which accounts for over two-thirds of the US economy, is indicated to have experienced growth by a reading above 50. The drop in prices paid for inputs is great news for the future inflation outlook.

Technical Analysis

Gold showed signs of a rebound on February 15, when the precious metal formed a bullish reversal pattern popularly known as Morning Star in Japanese candlesticks jargon.  Subsequently, the formation of a failure swing traced by the peak at 2195.17 and the trough at 2157.14 dollars per troy ounce on March 20 opened the way to establish an all-time high of 2288.38. While Gold remains in an uptrend, the possibility of a correction is on the table. The 50-period Moving Average and the Momentum oscillator agree with the bullish outlook. Specifically, the prices hover above the Moving Average line, and the Momentum remains above the 100 baseline. On the other hand, on closer inspection, the formation of a negative divergence between the price and the Momentum oscillator alerts for a potential correction to the downside.

Upside Potential Targets

2302.80: The first potential price objective is seen at 2302.80, representing the all-time high price of Gold.

2330.40: The second potential target is calculated at 2330.40, representing the 261.8 percent Fibonacci Extension drawn from the peak at 2222.91 to the trough of 2157.14.

2436.97: The fourth price target is the 423.6 percent Fibonacci Extension of the latest swing.

2385.74: The following potential target level stands at 2385.74, corresponding to the S3 resistance level estimated utilizing the monthly Pivot Points tool.

Downside Potential Targets

2222.91: The first potential support is calculated at 2222.91, aligning with the peak marked on March 20.

2211.17: The second price target is 2211.17, representing the weekly Pivot Point, utilizing the standard methodology. 

2195.17: The following potential support is seen at 2195.17, corresponding to a peak formed on March 8.

2157.14: The fourth potential support level is 215714, representing the swing low marked on March 22.

Conclusion and Considerations

In conclusion, the trajectory of the price of Gold has been upward, but a negative divergence between price and Momentum alerts for a possible correction. A decisive breakout of the all-time high will set the stage for a continuation of the prevailing trend. Meanwhile, the current market conditions do not exclude a short-term correction in the price of Gold. Its long-term potential remains positive due to its perceived value as a store of wealth and a hedge against inflation. Traders need to remain up-to-date on the latest geopolitical and economic developments, trade wisely, and closely monitor market trends to potentially optimize investment returns and mitigate probable risks and losses.

 

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Andreas Thalassinos
Andreas Thalassinos

Andreas Thalassinos is a recognized authority in the financial markets and world renowned for his expertise in algorithmic trading. He is a Certified Technical Analyst and highly respected lecturer in the education of traders, investors, and financial markets professionals. Thalassinos has played a key role in the development of education within the industry, training tens of thousands of traders of all skill levels. Traders value his seminars and workshops for the rich content, his passionate, charismatic, and lively presentations.