Gold Price Surges Over 1% Amid Middle East Tensions
- Gold prices rise as Iran launches missiles at Israel, escalating conflict in the Middle East.
- Investors shift focus from US jobs data to geopolitical uncertainty, driving up demand for safe-haven assets like Gold.
- A daily close below $2,665 could trigger a pullback, but ongoing tensions support bullish momentum for new record highs.
Gold prices soared over 1% on Tuesday following heightened tensions in the Middle East. Iran’s response to Israel’s attack on Hezbollah, which included launching nearly 200 missiles, fueled demand for the precious metal, despite overall strength in the US Dollar. As of now, the XAU/USD is trading at $2,662 after bouncing back from daily lows of $2,632.
Market Reaction to Geopolitical Uncertainty
Investor sentiment shifted from positive US jobs data to concerns over geopolitical instability, particularly after reports of Iran’s missile attack on Israel. This shift in focus towards risk aversion boosted demand for safe-haven assets like Gold.
According to sources, Iran’s missile attack on Israel is expected to involve 240-250 missiles, while Israel has vowed to continue striking targets in Lebanon. US National Security Adviser, Sullivan, warned of severe consequences for the attack, further fueling tensions in the region.
Jim Wyckoff, an analyst at Kitco, stated, “Gold prices are likely to reach new record highs if Iran continues its attacks on Israel. Silver prices could also see new highs in response to the escalating conflict.”
Technical Analysis and Market Trends
Gold prices reached a weekly high of $2,673, signaling bullish momentum. However, a daily close below the September 30 high of $2,665 could lead to a pullback if geopolitical risks subside.
The US Dollar Index (DXY) rose by 0.43% to 101.19, limiting the rally in non-yielding assets like Gold.
Daily Market Movers Overview
- August Job Openings & Labor Turnover Survey (JOLTS) increased to 8.04 million, surpassing estimates.
- ISM Manufacturing PMI for September remained at 47.2, falling short of expectations.
- Probability of a 25 bps rate cut stands at 61.6%, while chances of a 50 bps cut have decreased to 38.4%.
XAU/USD Technical Analysis
Gold prices rebounded above $2,660 amid heightened risk aversion. While momentum favors buyers, downside risks remain. A breakout above $2,685 could lead to further gains, while a drop below $2,650 may test support levels.
Gold FAQs
Role of Gold in Investments
Gold is considered a safe-haven asset and a hedge against inflation and depreciating currencies. Central banks hold significant Gold reserves to support their currencies during turbulent times.
Gold Price Factors
Gold prices are influenced by geopolitical instability, economic recession fears, interest rates, and the strength of the US Dollar. A weaker Dollar typically boosts Gold prices.
Analysis:
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