In the middle of this week's trading, the price of gold, the yellow metal finds support as a safe haven as global tensions intensify in Israel and enter its eleventh day. However, the question now is: Can gold prices test $2,000 per ounce before the month ends?
During this week, gold prices rose by more than 4%, adding to their gains since the beginning of the year, which amounted to about 7.4%. Although, it will be vulnerable to moving towards the psychological resistance level of $2,000 per ounce if tensions in the Middle East region increase, leading to the expansion of the scope of the war and its duration.
Gold & Silver Prices Highly Correlated
- At the same time, silver prices, the sister commodity of gold, stabilized in the middle of the week's trading.
- Silver futures were unchanged at $23,025 an ounce.
- In general, the price of the white metal rose by 3.7% this week, but silver prices are still down by approximately 5% since the beginning of the year.
Meanwhile, the price of gold rose primarily as safe haven, with the continuation of the war between Israel and Gaza. Recent events surround an explosion that destroyed a hospital in Gaza City. Hamas initially blamed Israel, but the Israeli army blamed a missile fired by Palestinian militants in error.
At the same time, market analysts say that the rise in the middle of this week's trading may be temporary, as many bearish factors have occurred that may prevent gold prices from rising. First, on the economic data front, US retail sales rose by 0.7% in September, which is double the consensus estimates. US industrial and manufacturing production was slightly higher than expected. Crude oil and gasoline supplies fell, indicating strong consumer demand.
The US Dollar also rose, as investors also found refuge in the international reserve currency. Accordingly, the US Dollar Index (DXY), which is a measure of the dollar against a basket of other major currencies, rose to 106.57, from opening at 106.25. As is known, the rise in the value of the US dollar is bad for goods priced in dollars because it makes purchasing them more expensive for foreign investors.
Another factor affecting the gold market is Treasury yields, which rose significantly throughout the trading session before paring some of their gains. According to trading, the yield on 10-year bonds rose above 4.90%, the highest level since 2007. The yield on 30-year bonds briefly exceeded 5.01% before falling below the critical threshold of 5%. The two-year bond yield was unchanged at 5.22%.
Generally, the futures market does not plan to raise interest rates at policy meetings in November or December. However, the Federal Reserve expects another increase in US interest rates this year. The gold market is usually sensitive to interest rates because it affects the opportunity cost of holding non-yielding bullion.
Gold price forecast today
The continuation of global geopolitical tensions, especially in the Middle East region, and the entry of many parties into the conflict, will negatively affect a third of global oil production, and thus global inflation rates, followed by a slowdown in economic growth. This is a good environment for gold prices Investors do not care about the movement of technical indicators towards strong overbought levels as much as they monitor global developments on the ground.
On the other hand, according to the performance on the daily chart below, there will be a first break in the current upward trend for gold if prices move towards the support levels of 1930 and 1910 dollars, respectively. Also, it is worth noting that today the number of weekly US jobless claims will be announced, the Philadelphia Industrial Index will be read, and then most importantly, the statements of US Central Bank Governor Jerome Powell.
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