Risk aversion is heating up, and gold is volatile at a high level. ATFX interpretation

Gold rallied slightly at a high level, continuing the consolidation trend after hitting a record high last week. Although the price has fallen in the short term, multiple risk-off factors still support the price of gold, making it more resilient near $4,245.

Uncertainty over global trade relations continues, and markets remain wary of potential trade frictions. Although there have been signs of moderation in recent remarks and news of meetings with Asian leaders, risks have not been fully digested, and safe-haven funds continue to flow into the gold market.atfxAnalysts believe that this factor remains one of the important sources of buying support for gold.

Fiscal policy uncertainty is also a cause for concern. At present, the funding shortage of some US federal government agencies has lasted for many days, and the Senate has repeatedly voted to resolve the deadlock, which has become one of the longest capital shutdowns in modern history. Fiscal and political uncertainty not only suppressed the performance of the dollar, but also further strengthened the market's demand for safe-haven allocation of gold.

In addition, high fiscal deficits and government debt levels in the United States and globally have exacerbated latent risks to the economy and markets, providing additional support for non-yielding asset gold.

Geopolitical risks have also weighed on sentiment, with local tensions rising recently and geopolitical events raising concerns about potential escalation, prompting continued flows into safe-haven assets such as gold.

The Federal Reserve's policy expectations are also an important support for gold. According to data from the FedWatch tool, the market has now fully factored in the expectation of the Federal Reserve's two interest rate cuts this year, which limits the room for the dollar to rebound, which is positive for gold.

Market participants are also concerned about the upcoming U.S. consumer inflation data and the outcome of the follow-up FOMC policy meeting, which could further affect the direction of the U.S. dollar and gold demand.

Overall, multiple risk aversion factors, geopolitical tensions, fiscal and economic uncertainties, and the Federal Reserve's easing expectations together form the fundamental background for gold prices to remain high and volatile.

From the daily chart, gold encountered short-term resistance near $4,275, and failed to break through many times, forming a high volatility pattern. Below support is concentrated in the range of $4,210 to $4,200 and last week's low of $4,186.

In terms of technical indicators, although the Relative Strength Index (RSI) has fallen from a high level, it is still located in the upper neutral region, with short-term bullish momentum remaining. The MACD bar chart shows a contraction, indicating that the high-level pullback pressure is still there.

The Bollinger Band daily line shows that prices are close to the upper-middle track, and gold may remain in the range of $4,210 to $4,275 in the short term, waiting for FOMC policy and inflation data to provide guidance on direction selection.

Editorial opinion:

Gold has shown some resilience after the short-term pressure pullback, and the $4,200 round number is the key support. If it breaks through $4,275, gold is expected to challenge $4,300 and the historical high of $4,380; conversely, breaking through the $4,160 area may trigger a deeper adjustment to $4,100.

Markets are likely to remain cautious ahead of the FOMC meeting, with short-term volatility expected to increase. ATFX cautioned investors to focus on breakouts of key support and resistance levels to determine the direction of the subsequent trend.