#Gold Technical Analysis# 24K99 News During the U.S. trading session on Tuesday (August 27), spot gold suddenly surged from around $2503 per ounce to briefly touch $2526 per ounce. FXStreet analyst Christian Borjon Valencia wrote on Wednesday, analyzing the technical trend of gold.
(Spot gold 30-minute chart, source: 24K99)
As of the close on Tuesday, spot gold rose 0.26% intraday, closing at $2524.54 per ounce; the lowest price of gold during the day fell to $2503.28 per ounce.
Valencia pointed out that as the U.S. dollar weakened, the price of gold in the North American market steadily rose on Tuesday. Federal Reserve Chairman Powell's dovish comments kept U.S. bond yields stable, weighed on the dollar, and boosted gold.
Powell said last Friday, "The time for policy adjustments has come," sending a strong signal of interest rate cuts.
During the New York trading session on Tuesday, the U.S. dollar index significantly declined from the session high of 100.91 to a low of 100.51.
(U.S. Dollar Index 30-minute Chart Source: 24K99)
Valencia added that the escalation of tensions in the Middle East also provided momentum for the rebound in the price of gold. The conflict between Israel and Hezbollah intensified over the weekend, and concerns about the potential escalation of the conflict will benefit gold.
On Tuesday local time, US White House National Security Council spokesman John Kirby said the US believes that Iran is "ready" to retaliate against Israel, so the US has strengthened its military deployments in the region. The US message to Iran is not to retaliate against Israel, there is no reason to escalate the situation or provoke a regional war; but if Iran attacks Israel, the US is prepared to protect Israel.
On Tuesday local time, Iranian Deputy Defense Minister Kureishi, when asked about the death of former Hamas leader Hania in Tehran, said that Israel had committed an unforgivable crime. Although Iran considers war to be unacceptable, any Iranian response to enemy attacks and threats is based on legitimate rights and the principle of deterrence, and Iran will decide on the timing and extent of its response to threats.
Kureishi stated that for the time being, the Israeli regime must continue to be in a state of mental anxiety and panic. What is certain is that Iran's response will be unpredictable.
How to trade gold?
Valencia pointed out that although the price trend of the past few days indicates that traders are unwilling to position themselves before the release of US PCE inflation data, there is still an upward momentum in the price of gold.
From a momentum perspective, the Relative Strength Index (RSI) has failed to break through the previous peak, which is opposite to the trend of gold prices, indicating a possible negative divergence is on the horizon.
Valencia said that if the gold price falls below this week's low of $2503 per ounce and $2500 per ounce, it will pave the way for a deeper correction. The next support level will be the high point of July 17th at $2483 per ounce, followed by the psychological level of $2450 per ounce.
If gold continues to go lower, the support is expected to be at the 50-day Simple Moving Average (SMA) of $2410 per ounce, followed by $2400 per ounce.
(Spot gold daily chart source: FXStreet)
On the other hand, Valencia added that if the gold price breaks the historical high of $2531 per ounce, it could rise to $2550 per ounce, and then challenge $2600 per ounce.
At 08:37 Beijing time, spot gold was reported at $2525.70 per ounce.