Gold prices climbed above the crucial $1,800 mark on Monday in response to the ongoing Israel-Hamas conflict. However, the trajectory of this safe-haven rally will depend on the extent to which the crisis affects not only gold but also oil and other global markets, according to analysts.
The most-active gold futures contract on New York’s Comex, for December, settled up $19.10, or 1%, at $1,864.30 per ounce. At the time of reporting, during the 15:30 ET (19:30 GMT) session, the contract was trading at $1,875.85, following a session high of $1,875.85.
The spot price of gold, closely monitored by some traders, stood at $1,861.51, marking a gain of $28.92, or 1.6%, for the day. The session’s peak was $1,862.26.
Gold had recently hit 7-month lows, with futures dipping to $1,859.55 and the spot price falling to $1,810.47.
Sunil Kumar Dixit, Chief Technical Strategist , analyzed the market’s recovery amid the Middle East crisis. “Gold maintains stability above $1,850-$1,855 and seems in no rush to retrace for filling the runaway gap left at $1,832,” said Dixit, referring to the spot price. He added, “Immediate support is seen at $1,845, which if broken, can trigger pullback towards the gap at $1,832. A sustained break above $1,858 will put gold on a momentum drive towards the next leg higher at $1,880 as an initial station.”
As Hamas continued rocket attacks on Tel Aviv, Israel’s largest city, and Prime Minister Benjamin Netanyahu pledged to “change the Middle East” through Israel’s actions against the Palestinian militant group, traders in both the oil and gold markets closely monitored the immediate impact of the crisis on these two assets.
One focal point was the potential disruption of Iranian oil supply. Iran, the world’s fifth-largest crude exporter, has historically supported the Palestinian cause and is often associated with Middle East conflicts. An adviser to Iranian Supreme Leader Ali Khamenei expressed support for the operation against Israel, which had reportedly resulted in the deaths of around 1,300 people at the time of reporting and the abduction of dozens of Israelis by Hamas ground forces.
John Kilduff, a partner at New York energy hedge fund Again Capital, emphasized the potential “reset” in both gold and oil markets due to the crisis. Kilduff, who has analyzed the impact of Middle East geopolitical strife on oil for two decades, highlighted the critical factor of the crisis’s impact on oil supply, including potential production and export disruptions. He also raised questions about whether the U.S., which had previously imposed sanctions on Iranian oil, might intensify its stance.
Kilduff concluded, “Without the heat of high oil prices, gold might find difficulty reaching new highs too, despite the geopolitical premium it is supposed to reflect.” The market will closely monitor developments in the region to assess the extent of the crisis’s impact on both gold and oil.
