Gold, the perennial safe-haven asset has slumped to nearly three-week lows. Despite this recent dip, gold has maintained a 15% gain since mid-February, spurred by a mixture of geopolitical tensions, central bank acquisitions, and robust demand from Chinese buyers.

The descent in gold prices began after the precious metal failed to retest its new all-time high of $2,431, recorded on April 12. 

Currently, gold price today is trading at $2,318, with this retreat attributed to profit-taking activities and a reduction in long positions within the futures markets, as investors recalibrate their strategies in anticipation of upcoming U.S. economic data.

This week is particularly crucial for gold market dynamics as the Federal Reserve’s preferred inflation measure is set to be released. This data could provide further insights into the future course of monetary policy, especially in light of recent hawkish signals from policymakers following strong inflation reports.

The Federal Reserve’s decisions are immensely influential in the gold market, as higher interest rates tend to diminish the appeal of non-yielding assets like gold.

Despite the present downturn, some market strategists remain optimistic about gold’s mid-term prospects. Nicky Shiels, Head of Metals Strategy at MKS PAMP, maintains a price target of $2,500 per ounce.

Shiels suggests that while there is potential for further short-term declines, the overarching market conditions that have supported gold prices—such as geopolitical risks and central bank buying—remain intact.

AI predicts Gold price

Looking ahead, AI-driven forecasts are predicting a significant rebound in gold prices, with a potential target of $3,171 by May 1, 2024.

The projection of gold reaching $3,171 by May 1, 2024, appears highly ambitious given the current market context and the short timeline involved. This forecast implies an unprecedented rapid increase from current levels, which would require a confluence of extreme factors such as a major geopolitical crisis, a drastic shift in monetary policy, or a severe market disruption—scenarios that currently seem unlikely.

Gold technical analysis

Additionally, technical indicators do not fully support such a dramatic rise; the recent bearish trend and failure to break past recent highs suggest a consolidation rather than a steep ascent.

Turning to technical indicators, the 50-day Simple Moving Average (SMA) for gold stands at $2,239.33, while the 200-day SMA is noted at $2,056.10.

The 14-Day Relative Strength Index (RSI), a measure of momentum, is at 51.76, indicating neither overbought nor oversold conditions, but rather a neutral market sentiment.

Market fundamentals, including ongoing hawkish tones from central banks and stabilizing economic data, further temper expectations for such an aggressive upward movement in the gold price within such a brief period.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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