(Kitco News) - Gold prices have come off their recent highs due to successful diplomatic efforts which have allowed for a near-term de-escalation in the Middle East, according to Richard Snow, Strategist at DailyFX.
In his analysis, Snow noted the recent agreement that will see aid flowing to the civilian population in Gaza after two Israeli hostages were released. “This and other ongoing conversations could result in a momentary respite in what has otherwise been a frantic war with the potential to spillover into a regional conflict,” he wrote.
Snow said he believes that the gold market has taken this an opportunity to take some risk off the table and reassess the next move. “Panic buying of the safe haven metal led gold higher, only showing a loss of momentum around the $1985 level,” he wrote. The 30-day expected gold volatility index has escalated towards levels not seen since the collapse of SVB amidst the regional banking turmoil earlier this year. “Such a surge in expected volatility suggests gold is likely to remain well supported as GVZ tends to rise more when gold prices accelerate,” he said.“XAG/USD rose and breached the 200-day simple moving average, posting a close marginally above the line,” he wrote.
Snow pointed out that the temporary reprieve highlights the 38.2% Fibonacci retracement of the 2021 to 2022 major move around 22.35. “However, the bullish bias remains intact, with a return to 23.20 not out of the question and even a possible advance towards the 50% Fibonacci level as a guideline,” he wrote.
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