Gold maintains upward bias on Iran and Fed speak?

  • Gold surged to a record high of $2,450 potentially due to escalating geopolitical tensions following the deaths of Iranian leaders, but later retreated slightly.
  • Despite improved market sentiment and steady Fed interest rate policies, concerns over further geopolitical risks could push gold prices higher.

Gold surged at the beginning of the week due to escalating geopolitical tensions, reaching a new all-time high of $2,450. However, it has since retreated slightly but perhaps maintains an upward bias.  

The rise in gold prices could have been fueled by news of the deaths of Iranian President Ebrahim Raisi and Foreign Minister Hossein Amir Abdollahian in a helicopter crash. U.S. Defense Secretary Lloyd Austin stated that he did not foresee any broader impact on regional security. Although, according to Sky News there are concerns that groups within Iran, including an offshoot of Islamic State, might attempt to exploit the situation. Mohammad Mokhber has been declared Iran’s interim president.  

Despite the initial surge, improving market sentiment caused XAU/USD to erase most of its daily gains, but it remains above $2,400. Further downside could see key support levels come into play like Friday’s low of $2,374 and the 21-day Simple Moving Average (SMA) at $2,340. If geopolitical concerns intensify, gold could rise further, with $2,500 serving as a psychological resistance level. Technically, gold is moving away from overbought conditions, which could attract buyers and support further gains.  

Elsewhere, Atlanta Fed President Raphael Bostic reiterated that his forecast for the Fed’s interest-rate policy remains unchanged, expecting one rate cut in the October-December quarter. Vice Chair Michael Barr echoed this sentiment, stating that the Fed should maintain steady interest rates, citing disappointing CPI data from Q1 as a reason for caution. 

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