Gold prices climbed above $2,720 per ounce on Friday, fueled by increasing geopolitical tensions in the Middle East and uncertainties surrounding the upcoming U.S. elections.
Alexander Zumpfe, a precious metals trader at Heraeus Metals Germany, stated, “As conflicts escalate, especially after Hezbollah’s announcement to intensify the war, more investors are turning to gold as a safe haven.”
The ongoing conflict, combined with commitments from Israel and Hezbollah to continue fighting, has raised concerns in the market. Investors are looking for stability in gold as they become more risk-averse, fearing global market instability. The rising tensions have dashed hopes for a quick resolution to the hostilities.
Zumpfe also mentioned that “expectations of more lenient monetary policies are fueling the rally.” Traders are closely monitoring central banks, as lower interest rates make gold more attractive since it does not yield interest.
Gold has performed remarkably well this year, with prices rising over 30% in 2024, marking the strongest annual gain since 1979, according to data from LSEG.
Market sources suggest that the European Central Bank (ECB) may cut rates again in December unless economic indicators show significant improvement.
The CME FedWatch Tool indicates a 92% likelihood of a Federal Reserve rate cut in November. Analysts expect these policy changes to further boost gold prices.
Max Layton, Global Head of Commodities Research at Citi, predicts that gold could reach $3,000 per ounce within the next six to twelve months. Layton attributes this forecast to growing economic uncertainty in the U.S. and Europe, which is expected to drive up investment demand and increase inflows into exchange-traded funds (ETFs).
With several factors aligning, the outlook for gold remains bullish. It continues to establish itself as a leading safe-haven asset amid global economic and political unrest.
Gold prices are likely to stay strong above $2,715, supported by geopolitical tensions and central bank expectations. Resistance levels are targeted at $2,736 and beyond, reflecting positive market sentiment.
Currently, gold prices hover around $2,720, displaying strong upward momentum after surpassing key levels. The 4-hour chart shows that gold has broken through the 127.2% Fibonacci extension, suggesting more potential for growth. The next resistance is at $2,736.46, and a breakthrough here could target the $2,749 to $2,766 range.
Technically, the 50-day exponential moving average (EMA) at $2,668.09 and the 200-day EMA at $2,611.44 indicate ongoing bullish support. Immediate support is solid at $2,696.62, and falling below $2,715 could signal a shift in sentiment, potentially leading to a sell-off.
For now, the trend remains positive above $2,715, with cautious optimism as long as key support levels hold.
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