The gold price is on the rise since the start of this week, due to increased demand for safe havens. After a Ukraine missile attack that used ATACMS, Russian President Vladimir Putin revised the nuclear doctrine of his country on Tuesday.
On Friday, the SPDR Gold Trust ETF (GLD), which tracks gold prices in SPDR Gold Trust Trust ETFs, traded at $250. This is a gain of over 5.6% compared to its low point for this month.
The easing US dollar also has helped to support the gold price. The greenback’s rise is a major headwind to gold prices, as long as investors are focused on geopolitical tensions and interest rate decisions by the Fed.
Prices are expected to remain supported by economic and geopolitical uncertainty, as well as the strong demand for gold on the physical market.
Geopolitical tensions
Gold is a traditional safe-haven asset that thrives when geopolitical uncertainty exists. It is in fact one of the main drivers behind this year’s rally. The precious metal has recorded gains eight times out of ten. Gold prices have reached new record levels in recent weeks due to uncertainty over US presidential elections and conflicts in the Middle East.
Gold prices have been impacted by the US Presidential election and the subsequent rise in US dollars. However, it remains above the crucial resistance-turn-support zone of $2,500 per ounce. It has risen from the low of $2,537, which it reached late last week, to $2663 at this writing.
The escalating conflicts in Eastern Europe have increased demand for precious metals, and other assets that are considered safe havens.
Russia warned of a possible nuclear conflict after Ukraine fired ATACMS-made missiles from the US against its own territory. The Ukraine responded quickly to Washington’s approval of using the long-range rockets, while Russia confirmed the attack against a Russian military base in the Bryansk region.
In response to the attack, Russia’s foreign minister stated during a G20 press conference in Brazil that “this is, ofcourse, a sign they are looking to escalate.” This will mark a new, qualitative phase in the Western War against Russia. We will respond accordingly.”
Vladimir Putin, the Russian president, approved Tuesday the revised Russian nuclear doctrine following the attacks. This update outlines the conditions in which Russia can use its nuclear arsenal. The update states that Russia would treat an attack by a country without nuclear weapons, backed up by a nuclear state, as joint aggression against the nation.
US Dollar Index Strength
The ongoing US Dollar index rally has boosted the gold price. The greenback has rallied since Donald Trump won the US Presidential elections. The Trump victory euphoria is starting to fade, which has supported the gold price.
The dollar is continuing to rise and this remains the main headwind facing the precious metal. On Thursday, it was the dollar that hit its highest level in a year amid discussions about Trump’s policies on trade, Fed rate decisions, and tensions across eastern Europe. The dollar index reached $107.16 on Thursday. This is the level that was set for 1st Nov 2023.
Investors worry that Trump’s policies on trade could lead to inflation. The market is betting that the Fed will reduce its rate reductions due to these concerns and recent comments by Fed officials on the US economy.
The decision of the US central banks to stop its rate reductions during their December meeting could weigh down on the gold price short-term. The positive outlook on the physical gold market combined with ongoing geopolitical, economic and political uncertainties will limit the losses.
GLD ETF Price Analysis
TradingView GLD Chart
On the daily chart, the GLD ETF fell and reached a bottom at $236. This was an important level because it was right next to the Fibonacci Retracement of 23.6%. This was an important level because it coincided with the 100-day average.
Both the Relative Strength Index and MACD have pointed up, indicating that momentum is present.
The outlook of the fund is therefore positive, and the highest point for the current year, $257, will be the next to monitor. If the fund moves above this level, it could lead to further gains as it invalidates the double-top chart pattern which is usually a bearish pattern.
This article Is the SPDR GLD ETF an investment as gold prices rebound? This post may change as new information becomes available
