Gold and its golden outlook!

Gold ended last week higher as the US dollar eased a little, treasury yields weakened, and geopolitical risks increased across the board.

CME Group's Fed Watch tool shows less than a 3% chance of a rate cut in the March meeting, while it was more than 50% two weeks ago and above 80% just less than a month ago. At the same time, there is less than a 20% chance of an interest rate cut in May, while it was more than 80% just a couple of weeks ago. However, as the market now prices in a more moderate easing policy, market participants can adjust their expectations accordingly and avoid more severe blows in the stock markets, which is not such good news for gold investors.

On the other side, rising geopolitical tensions, which increase the appeal of safe-haven assets, may lead to more demand for gold and higher prices. The war between Israel and Hamas is threatening to spill over into the Middle East, while tensions in the Red Sea area have already involved different countries. From a geopolitical perspective, increasing the level of conflict with the Houthis means more tension with Iran, which is the main supplier of Yemen's Houthi militias. If that happens, we can expect the gold price to rise to much higher levels above $3,000. Therefore, as long as this possibility exists, the gold price will not have an intention to decrease.

From a technical point of view, after declining from its all-time high of $1,137, the price of the yellow metal is still above 50% of its Fibonacci level, which is a positive signal for bulls. We can expect much higher levels if the price can increase above 23% of the Fibonacci level at $2,060. On the flip side, falling below 50% ($1,975) will open the doors to deeper levels, which is less likely.