Gold Prices Forecast: Safe-Haven XAU/USD Fluctuates as Israel-Hamas War Heats Up

Highlights

• Gold retreats after 3% surge due to Israel-Hamas conflict.
• No imminent U.S. rate hikes offer additional support.
• • Traders await Fed Chair Powell’s upcoming speech.

Gold Retreats After Rally as Israel-Hamas Conflict Intensifies

Following a 3% surge attributed to escalating Israel-Hamas tensions, gold prices retreated on Monday. At the time of trading, Spot gold (XAU/USD) was down by 0.65%, trading at $1919.86. Gold has long been viewed as a sanctuary during geopolitical unrest, and the metal touched its highest point since September 20 at $1,934.82. With no immediate resolution to the Middle East crisis in sight, the precious metal continues to lure anxious investors.

The volatility comes as the Israel-Hamas conflict intensifies, triggering a rush to gold, seen as a ‘safe-haven’ asset. Israel’s recent transition from air to ground operations in the Gaza Strip adds another layer of uncertainty, boosting demand for gold. The situation has kept traders on their toes, making price points at $1,920 and $1,900 key areas of interest.

Amid the geopolitical risks, the U.S. inflation report released last week hinted at no imminent interest rate hikes from the Federal Reserve. Current market sentiment indicates a 69% likelihood of the Fed maintaining current rates, offering additional support for gold prices. Speculators, however, have increased their net short positions in COMEX gold, adding a complex layer to market dynamics.

Investors are now keenly waiting for Federal Reserve Chair Jerome Powell’s upcoming speech, balancing it with developments in the Middle East to gauge gold’s next move. Meanwhile, U.S. President Joe Biden advocates for the elimination of Hamas, implying the possibility of an extended conflict, further unsettling markets.

Short-term Forecast: Bullish

Given the current landscape, gold is set for a bullish trajectory in the short term. Rising geopolitical tensions and speculation over the Federal Reserve’s next moves will likely keep the metal in traders’ crosshairs. Should tensions escalate further, gold could inch closer to the $2,000 mark, offering both risk and reward in an increasingly volatile market.

Technical Analysis

The current daily price of Gold (XAU/USD) at 1916.90 is below the 200-day moving average of 1929.38 but above the 50-day moving average of 1900.99. This indicates a mixed outlook, as gold is struggling to find a clear direction.

The asset is trading within a range defined by minor support at 1811.03 and main support at 1752.85, with minor resistance at 1930.64 and main resistance at 1952.21.

Given its positioning between these key levels and mixed moving average signals, the current market sentiment leans neutral, but we could see an acceleration to the upside if buyers can overcome the 200-day moving average with conviction.