Gold: geopolitics on the scene

The latest developments on the gold market are clearly showing that this metal continues to be perceived by the majority of investors as a safe-haven asset. During times of relatively normal market conditions, this fact could not be clearly perceived, however, any sort of geopolitical or global tensions will first push the price of gold to the upside, or, in other words, the demand for gold would be significantly increased. New geopolitical tensions in the Middle East, impact another week of price of gold heading toward the new highs. In Friday`s trading session, its price reached the highest level at $2.430, but still, the gold is ending the week at level of $2.343.

Since the beginning of March, gold is moving within highly overbought territory. As per charts, there are all indications on potential short reversal, however, at the current moment in time it should be taken with a reserve. Simply, because charts and technical analysis are good fit for relatively “normal” market movements. This time fundamentals play a crucial role. That means, as long as negative news is coming from the Middle East, the demand for gold will hold on the market. A new tension occurred during the weekend, might impact further increase in the price of gold at the beginning of the week ahead. Some precaution in a trading strategy development should be considered during the next week.