Gold Rebounds After Friday's Decline: Factors Driving Momentum and Technical Outlook

Gold attempts to rebound following Friday's sharp drop

The price of gold shows a renewed upward momentum at the start of the week as it attempts to rebound from the drop seen on friday which brought the price down nearly 1.50% after the Federal Reserve's recent signaling of the conclusion of its monetary policy tightening cycle and the suggestion of a cumulative 75 basis points rate reduction in 2024 led to a sharp upward move last Wednesday. Additionally, heightened geopolitical risks and concerns surrounding a more pronounced economic downturn, particularly in China and the Eurozone along with general economic uncertainty, provide added support to gold as a safe-haven asset.

From a technical point of view, any subsequent upward movement is likely to encounter resistance in the vicinity of the $2,040 range and a breach beyond this level could prompt a test of last week's peak, around the $2,049-2,050 region. On the other hand, a downside correction may find support in the $2,015-2,010 area before approaching the psychological threshold of $2,000 and which may be followed by the $1,980 area from which last wednesday's post-FOMC upward move started.