Gold has historically attracted investors seeking safety amid geopolitical uncertainty. Yet gold futures continue to decline despite the ongoing Russia-Ukraine war, the U.S.-Iran conflict, and expanding Middle East hostilities involving Houthi attacks on Saudi Arabia, according to an analysis by Barchart commentator Don Dawson, syndicated on Yahoo Finance. The question, as framed by the author, is what could sustain a rally in gold if multiple wars cannot.
From a technical standpoint, gold futures have formed a series of lower highs and lower lows since reaching their all-time high earlier this year. The weekly chart shows deteriorating bullish momentum, with prices trading below a declining 20-week simple moving average (SMA), which has also crossed below the 50-week SMA. The daily chart displays a similar pattern, with prices below both the 20-day and 50-day SMAs.
The author cautions that attempting to pick a bottom solely because geopolitical tensions remain elevated can be costly, and suggests that traders may be better served waiting for a reversal confirmed by improving market structure and a sustained recovery above key moving averages. Energy markets offer a possible, though not yet confirmed, source of support for gold. According to the U.S.
Energy Information Administration (EIA), average retail diesel prices fell from about $6.53 per gallon on September 21 to $6.20 on October 5, a decline of 5.1% in two weeks. On October 9, President Trump announced an agreement with Russian President Vladimir Putin to release additional Russian diesel supplies into global markets, and the U.S. Treasury Department temporarily eased sanctions to facilitate those shipments.
Analysts, however, question whether the additional supply will significantly lower prices. The author also notes that the approaching end of the fall harvest should reduce seasonal diesel demand from agricultural transport as the Corn Belt harvest winds down in late October and early November. Together, these factors could help moderate diesel prices and, potentially, inflationary pressures.
The inflation outlook is central to the dollar channel. The September Consumer Price Index (CPI) report is scheduled for release on October 14, and traders will be looking for signs of persistent inflation. If inflation eases, the Federal Reserve may be more inclined to lower interest rates.
Lower-rate expectations could weaken the U.S. dollar, which has recently pressured precious metals and grain prices, and a weaker dollar could eventually support both markets. The author presents these relationships as potential outcomes rather than forecasts. The author concludes that geopolitical uncertainty, declining energy prices, and shifting interest-rate expectations may eventually give gold bulls reasons for optimism, but a strong fundamental argument does not guarantee a trend reversal.
For now, the weekly and daily charts continue to favor the bears, and traders may be better served by respecting the prevailing trend until price action shows otherwise. Source: Don Dawson, Barchart.com, republished on Yahoo Finance. Data cited from the U.S.
Energy Information Administration (EIA) and the U.S. Treasury Department as referenced in the original article.
Source: finance.yahoo.com