Market News & Analysis
Gold Regains Momentum on Reignited US-Iran Tension
George Lam April 23, 2020 3:35 AM
Gold bulls had the upper hand on Wednesday, as the precious metal advanced 1.7% to $1,714, the largest daily gain in nearly two weeks. U.S. President Donald Trump tweeted that he has "instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea", which seems to have reignited the tensions between the two nations. It is worth remembering that U.S. forces killed Iranian major general Qassem Soleimani in January. In fact, hours before Trump's tweet, Iran's Revolutionary Guard Corps said the country has successfully launched its first military satellite into orbit. Such a move could advance the Tehran's long-range missile program.
Meanwhile, the increase in investors' demand for the bullion shows no signs of stopping. Total holdings in bullion-backed ETFs rose for a 23rd straight session on Wednesday, according to Bloomberg data.
From a technical point of view, gold maintains bullish momentum in the short term as shown on the daily chart. Prices rebounded after retreating to its previous top, which should now provide support and potentially formed another high-low. This level is also a 78.6% Fibonacci retracement support of the rally started in late March. Bullish investor might consider $1,645 as the nearest support, while the 1st and 2nd resistance are likely to be located at $1,747 and $1,790 respectively. In an alternatively scenario, a break below $1,645 is likely to open a path to the next support at $1,609.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.