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Safe Haven Buying Drives Gold to New ATH, Defying Strong Dollar Fundamentals

Gold prices rose to new all-time highs on Friday, despite strong US dollar-centric data. Spot gold traded at a new high of $2,327 at the time of writing, while futures gold was at $2,346 per ounce. The yellow metal’s latest gain has seen it shake off the dollar’s interruption that saw it go down by 0.38% on Thursday after seven consecutive sessions of wins. However, as of this writing, gold price were up by 1.47%, driven by a strong safe haven sentiment.

The US economy added 302,000 Nonfarm jobs in March, far-exceeding the forecast 212,000. Furthermore, that was a steep rise from February’s 270,000 jobs, which were revised downwards by 5k in Friday’s release. In addition, the unemployment rate fell from 3.9% to 3.8%, signaling a strong US economy despite recent soft data across different sectors. The strong jobs data increases the likelihood that the Fed will be slow to initiate interest rate cuts, affirming FOMC members’ comments issued this week.

 The upbeat jobs data has strengthened the dollar against many currencies, with the DXY climbing to 104.261.  Also, yields on benchmark 5-year and 10-year US Treasury bonds stood at 4.353% and 4.369% respectively adding to the greenbuck’s armour.

Nonetheless, gold price has defied the positive dollar macroeconomic data to print yet another ATH-a phenomenon that has become all too common in 2024. Demand for the precious metal is driven by the rising temperatures in the Middle East after Iran threatened to retaliate against Israel following a strike on the Iranian consulate in Syria. The move has seen Israel close operations in 28 embassies across the world.  Furthermore, it announced on Thursday that it had received intelligence of a potential attack by Iran in a matter of a few days.

The prospect of war is likely to keep propelling gold prices up as retail investors, institutions and central banks bolster their portfolios.

Technical analysis

While gold price is well into the overbought territory as per the RSI indicator, the upward momentum will prevail as long as the buyers keep it above the 2318 pivot. With the buyers in charge, a move past the resistance at 2331 is likely. Furthermore, that could create the momentum to head higher to test 2340. However, if the sellers bring the prices below 2318, spot gold could find support at 2303. A continuation of seller control at that level could see a further decline to test 2290.