- Gold price forms a fresh multi-week high amid the Middle East crisis.
- Dismal US economic data may push the Fed to cut rates soon.
- The metal corrects after a strong upside with the potential to hit $3,500.
Gold price breaks above the $3,400 mark on Friday, posting fresh multi-week highs near $3,445 as the safe haven flows dominate after Israel attacks Iran’s nuclear enrichment sites.
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The Israeli Prime Minister announced the beginning of “Operation Rising Lion” against Iran’s missile facilities and other military capabilities. He also noted that the operation will continue for as many days as it takes. Iran also responded that the US and Israel will pay a heavy price for the aggression. Recent news reveals that Israel has already intercepted drones in Jordanian and Syrian airspace.
US President Trump will call a meeting of the National Security Council later today, where he will discuss the Iran-Israel conflict. He also warned Iran not to target American personnel or interests in retaliation.
According to Reuters, a US official reported on the condition of anonymity that the American military is planning for several contingencies in the Middle East, including aiding the evacuation of US citizens.
Gold remains the biggest beneficiary of the situation, gaining over 1% on the day. The risk-averse environment also benefited the US dollar. However, the currency had lost around 0.8% on Thursday due to a weaker PPI reading.
Cooling consumer and wholesale inflation, combined with subdued jobs data. The unemployment claims data marked an eight-month high. The situation may push the Fed to cut interest rates soon, which can further boost gold’s demand as a non-yielding asset.
Key Events Ahead
- Prelim UoM Consumer Sentiment
- Prelim UoM Inflation Expectations
Gold Price Technical Analysis: Pullback Amid Oversold RSI
The 4-hour gold chart shows a mild pullback after briefly breaking the previous top at $3,440. The 20-period SMA is pointing upwards, showing a strong bullish trend. However, the RSI is slowly retreating after hitting the overbought zone. It means the pullback can be significant. The immediate resistance lies at $3,445, ahead of all-time highs around $3,500.
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Alternatively, the downside may find strong support at today’s pivot point near $3,375. Falling below the level may trigger strong selling and drift to $3,350.
However, the path of least resistance is still on the upside. The metal may consolidate around $3,400 in a mild range before resuming its upside.
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Saqib Iqbal
