Gold Market Fundamentals & Psychology
In recent days, many traders have anticipated a continued rise in gold prices due to the heightened geopolitical tensions, especially given the ongoing conflict. On Thursday, gold initially surged in response to the war-driven buying pressure, but it soon reversed course after hitting the 2685 level, subsequently experiencing a sharp 400-pip decline.
Analyzing the market psychology, this situation mirrors the environment just before the recent Federal Reserve announcement. At that time, geopolitical news β specifically Iran's announcement of launching rockets toward Israel, which occurred on a Sunday β created significant market noise. Despite these headlines, gold failed to make a significant upward move, with the market instead continuing its sell-off.
It's crucial to understand that the gold market doesnβt always respond predictably to global events. Often, price movements are driven more by underlying market dynamics than by external factors.
Looking ahead, while gold could potentially rise if it holds above the 2654 level, targeting 2675 or even 2680, caution is advised. The likelihood of further selling pressure remains strong.
Over the coming month, I anticipate a meaningful pullback to around the 2590β2530 range, where fresh buying opportunities may emerge.
Trade carefully, and manage your expectations wisely.
Good luck!