Gold price has been showing a positive stability in the past few days, as it attempted to break the 1913.15 level on Friday but ended the day above it, which keeps the bullish outlook active for the upcoming period. The precious metal is supported by the stochastic positivity, as well as the EMA50 that carries the price from below.
The expected targets for the gold price are 1929.00 and 1945.20, which are the next main resistance levels. However, the price needs to hold above 1913.15, which is a key support level, to continue the suggested bullish wave. A break below this level will stop the positive scenario and push the price to resume the bearish trend again.
Gold price benefits from global factors
One of the main factors that boost the gold price is the global uncertainty caused by various events, such as the COVID-19 pandemic, the geopolitical tensions, and the economic slowdown. Gold is considered a safe-haven asset that investors flock to in times of crisis and instability.
Another factor that helps the gold price is the weakness of the US dollar, which makes gold cheaper for holders of other currencies. The US dollar index, which measures the greenback’s strength against a basket of six major currencies, has been declining since July and reached its lowest level since January 2021 on Friday.
The US dollar is pressured by the dovish stance of the Federal Reserve, which has maintained its ultra-loose monetary policy despite rising inflation and signs of economic recovery. The Fed has signaled that it will not raise interest rates or taper its bond-buying program until it sees substantial progress in the labor market and inflation expectations.
Gold price faces some challenges
Despite the positive factors that support the gold price, there are also some challenges that limit its upside potential. One of them is the strong demand for riskier assets, such as stocks and cryptocurrencies, which reduce the appeal of gold as a safe-haven asset.
Another challenge is the possibility of a hawkish shift by the Fed in response to higher inflation and growth data. The Fed is expected to announce its tapering plans later this year, which could boost the US dollar and weigh on the gold price.
Moreover, the gold price faces some technical resistance levels that could hinder its rally. The first one is 1929.00, which is the high of June 2020. The second one is 1945.20, which is the high of September 2020. The third one is 1960.00, which is a psychological level and a round number1.
