Is Gold Preparing for a Fall? Analysts Announces Their Expectations!

In the wake of rising geopolitical tensions, investors rushed to safe-haven gold. Thus, gold prices saw new highs in a short period of time. The chaos in the Middle East continues to create a geopolitical safe-haven supply in the gold market. But there are signs that the precious metal's bull run is losing momentum. However, analysts say he doesn't want to bet against it.

"**These developments have put the gold price in a consolidation zone!" **

As you can see from Kriptokoin.com, gold prices rose above $2,400 after the escalating tension in the mid-direction. However, the gold market failed to maintain its overnight gains. Thus, it closed the week consolidated around $2,400. Analysts also note that Friday's overnight rise was lower than last week's intraday record high of $2,448.80, a sign that even geopolitical uncertainty is losing its grip on the market. Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, said:

the thing about the story of Iran and Israel is that there isn't much firepower left in it for now. When Israel first attacked the Iranian embassy, market players were expecting a big reaction. More than anything else, Iran's reaction was for show, and investors paid attention. The Israeli government's response has been very, very limited, and now traders are not worried about it. All of this has put the gold price in a consolidation zone with downside risk.

According to some analysts, as geopolitical tensions stabilize, the market will begin to focus on more fundamental dynamics. This, they say, does not bode well for gold in the near term. Some analysts also note that the macroeconomic environment will continue to support higher bond yields and a stronger U.S. dollar, two traditional barriers for gold. Ole Hansen, Head of Commodity Strategy at Saxo Bank, comments on the latest developments:

I'm worried that this market will suddenly wake up one morning and realize that the dollar and yields have risen sharply, and the possibility of a rate cut is gone. (...) What worries me the most is the long positions of large hedge funds. But while the bulk of these positions were initiated at much lower prices, and stop loss levels were raised as positions formed, we could easily see a $50 drop without rattling anyone. From a trading psychology perspective, it makes sense that some vigilant long position holders have started pulling chips off the table.

Lukman Otunuga, Head of Market Analysis at FXMT, agrees that gold is consolidating. However, despite this, he says that there is no market that investors would want to bet against. From this point of view, Otunuga draws attention to the following levels:

Gold's aggressive jump above $2,400 on Friday morning underscores how uneasy markets are about tensions in the Middle East. While gold has given back most of its gains after Iran downplayed the impact of Israel's attack, the path of least resistance points to the north. Next week, the U.S. 1, which could affect bets on a Fed cut. Further volatility can be seen for the precious metal due to the quarterly GDP and PCE report. Speaking of technical issues, the bulls need to keep prices above $2,355 to test $2,400 and beyond. Weakness below $2,355 could open a path towards $2,320 and $2,300.

David Morrison, Senior Market Analyst at Trade Nation, notes that volatility in gold and silver continues to increase. However, he says investors should not ignore broader rise trends in the market. The analyst explains his views as follows:

The story is the same for both precious metals (gold and silver). Yes, both function as 'safe havens' in times of geopolitical and financial stress. But the story behind the current rally is that years of relative inactivity have been overcome by the realization among investors that diversifying their holdings is not a bad idea.

Economic data to watch next week:

• S: S&P Flash manufacturing and services PMI. Sales of new homes.
• Wednesday: Durable goods orders.
• Thursday: Advanced 1. Quarterly GDP, weekly jobless claims. Pending home sales. Japan Central Bank monetary policy decision. *Friday: Core PCE. Personal income and expenses.

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