Gold is once more gaining in popularity as a safe-haven asset as investors turn bearish on the global economic outlook. Gold price has been rising for the past four days and looks set to continue appreciating amidst US recession fears, growing geopolitical tensions and dovish Fed outlook. This blog discusses the reasons behind gold’s comeback and considers some of the technical analysis that indicates favourable prospects for this precious metal.

US Recession Fears

The US economy has started slowing down amid increasing worries about an impending recession. More conservative investors are seeking refuge in gold as a hedge against possible economic decline. The yield curve inversion is another signal that indicates looming recession so far boosting demand for gold. Therefore, while investors become more cautious, they can expect the price of gold to continue moving upwards.
Geopolitical Tensions

The Middle East has been the scene for escalating tensions between U.S.A and Iran. This situation is turning out to be a geopolitical cocktail. That attack on Hamas chief Ismail Haniyeh in Tehran was followed by an Israeli response which has generated fear of a general conflict. Investors are turning to gold as a protection against possible global insecurity. Trade war, on the other hand, had led to the increased attraction of gold as investors scramble for safe investments.

Dovish Fed Expectations

Expectations are that the Federal Reserve’s stance diverged sharply from its prior posture regarding interest rates hence there may be higher cut rates coming up ahead. There is widespread belief that there will be 0.25% cut in September this year priced in by investors and others suggest that it could go as far 0.50%. Most affected by this shift towards dovishness is the US Dollar which makes gold more appealing to investors. In addition, US Treasury bond yields have fallen lately thereby putting cap limits on any subsequent recovery of the USD and further providing support to gold prices.
Technical Analysis

Gold’s price has to stay above $2,400 in a technical manner to confirm a bullish scope. Resistance levels at $2,410-2,412 and 2,430 dollars are anticipated to be tested with the possibility of triggering short covering rallies by sustained breaks above these levels. The all-time high near $2,448-2,450 horizontal region is followed by next relevant hurdle which is 2483-2484$ level. Conversely, support levels at $2368 and $2353-$2352 will likely attract buyers with further correction possible below 2344$.

Conclusion

Several factors including fears of US recession; geopolitical tensions and the expectation of dovish Fed have contributed to the resurgence in gold prices. Technical analysis offers an optimistic outlook supported by significant resistance and support levels. Amidst increasing investor’s caution on global economic prospects gold will remain attractive as safe haven asset. In light of this coupled by Federal Reserves soft stance and stubborn geopolitical feuds gold price would further appreciate making it a good investment opportunity for those who want protection against future losses.