Gold prices rose in early Wednesday trading, extending the positive momentum from previous sessions. After falling below $4,000 and touching a two-week low at the end of last week, the precious metal regained the upper hand, supported by dip-buying and increased safe-haven demand. Despite the flare-up in the US-Iran conflict and the resulting rise in oil prices, which typically act as a headwind for gold, traders are instead focusing on the fact that diplomatic channels remain open and that tensions could ease. Against this backdrop, the precious metal is likely to remain close to current levels, facing headwinds from volatile energy prices that could cap further gains. On the other hand, the $4,000 level continues to provide strong support, meaning that any move below this threshold is likely to trigger renewed dip-buying.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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