Gold prices have once again surged, reclaiming the $1,900 per ounce threshold after a significant boost caused by the recent Middle East crisis. The most-active gold futures contract on New York’s Comex, December, reached a final trade price of $1,945.90 per ounce on Friday, officially settling the session at $1,941.50, marking an increase of $58.50, or 3.1%, for the day. This surge propelled the benchmark gold futures to a 5% gain for the week, making it the most substantial weekly increase since March.
The closely monitored spot price of gold, reflecting real-time bullion trades, reached $1,932.82, experiencing a rise of $63.95 or 3.4%. Just the previous week, the spot price teetered at an intraday low of $1,810.10, narrowly avoiding slipping below the $1,700 mark.
The strong surge in gold prices on Friday represents the most significant daily increase for spot gold since March 17. The 5% weekly gain is also the largest since March.
The recent boost in gold prices was prompted by the escalating crisis in the Middle East. The Israeli government issued a warning late on Thursday for over one million people in Northern Gaza to evacuate the area as tensions escalated in its conflict with Hamas. Rumors had also been circulating that Israel was preparing for a substantial ground assault on Gaza.
The prevailing chaos in the Middle East has amplified the safe-haven demand for gold. The 2% rally over the weekend further intensified pressure on market bears.
A particularly noteworthy aspect of this gold rally is that it occurred while the U.S. Dollar Index (DXY) increased for a second consecutive day, marking a resumption of the greenback’s ascent over the last three months. Gold, traditionally inversely correlated with the dollar, bucked this trend, highlighting the urgency of the Middle East situation in driving safe-haven demand.
Gold: Spot Price Technical Outlook
For spot gold, the immediate resistance is anticipated at the descending trendline points of interest at $1,938 and $1,942, according to Dixit of SKCharting.com.
A continuation above $1,942 would potentially open the door to the previous month’s high of $1,953, marking the acceleration point for the next bullish run toward a new record high, following a retest of $2,080.
Dixit also observed that the 4-hour chart for spot gold indicated overbought conditions, suggesting a possible softening of its momentum. This could lead to a pullback toward the breakout zone around the 200-day Simple Moving Average (SMA) of $1,929 and the 100-day SMA of $1,923.
Should selling pressure drive gold below $1,923, it could lead to a further decline towards the 50-day Exponential Moving Average (EMA) of $1,897, followed by the Daily Middle Bollinger Band at $1,878.
