The gold market experienced a surge after six consecutive days of decline. As geopolitical tensions escalate, the precious metal benefits from a weakening U.S. dollar, but prospects for gains remain limited.
A surge in tension that favors safe haven values
Investors are turning to gold in the face of escalating international conflicts. The authorization given to Ukraine to use American long-range missiles marks a turning point in geopolitical relations. Meanwhile, Russian strikes have targeted key infrastructure, amplifying economic uncertainties.
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Furthermore, in the Middle East, Israeli military operations continue, particularly after the elimination of an important Hezbollah cadre. These events reinforce interest in assets deemed safer, notably gold.
A robust dollar slows the yellow metal's momentum
Despite this increased demand, the price of gold remains hampered by high US bond yields. The Fed, by maintaining key rates at the peak, continues to support a strong dollar. Recent statements from Fed Chairman Jerome Powell indicate that a rate cut is not imminent. This policy limits the upside prospects for gold, an asset with no direct return.
The economic balance in the face of Fed decisions
Growth forecasts in the United States, coupled with a still strong labor market, leave little room for significant rate cuts. Susan Collins, president of the Boston Fed, remains cautious about a possible reduction as early as December. For his part, Austan Goolsbee, of the Chicago Fed, evokes a gradual approach to achieve the 2% inflation objective.
Technical analysis: critical thresholds to monitor
Gold's recent decline has stabilized around $2,535, a level supported by the 100-day moving average. If this threshold were to give way, analysts predict a possible fall towards the 2 500 $or even lower, at $2,480.
Conversely, a rebound above 2 600 $ could propel the metal towards key resistance zones, notably between 2 620 $ et 2 625 $. A breakdown of this barrier could open the way to higher levels, up to $2,700.
Monetary policies in the background
The Federal Reserve's levers of action
The Federal Reserve plays a crucial role in the fluctuations of the dollar. By adjusting interest rates, it directly influences the demand for foreign exchange and, by extension, the price of gold. During periods of economic weakness, the Fed may adopt measures such asquantitative easing (QE)thus increasing liquidity and weighing on the American currency.
On the other hand, policies of quantitative tightening (QT)like those currently implemented, tend to strengthen the dollar by reducing the money supply in circulation.
With ever-changing economic and geopolitical factors, the gold market remains a key indicator of investor sentiments. The coming weeks promise to be decisive in determining whether the precious metal can regain ground in the face of persistent headwinds.
