Saturday, October 21, 2023

Gold price nearing $2,000/oz as Middle East turmoil feeds safe haven demand 

Gold prices rose for a fifth consecutive session on Friday, inching closer to the key $2,000 an ounce level, as fears of a further escalation in the Middle East conflict fed the metal’s safe haven appeal.

Spot gold was up nearly a percentage point to $1,992.63 an ounce by 11:55 a.m. EDT, the highest since mid-May. US gold futures saw a larger gain of 1.3%, trading at $2,006.70 an ounce in New York.

[Click here for an interactive chart of gold prices]

“People fluttered into gold and found a sense of safety amid geo-political risks. If there is an escalation in the Middle East conflict, gold prices will push through $2,000,” Phillip Streible, chief market strategist at Blue Line Futures in Chicago, said in a Reuters note.

Israel levelled a northern Gaza district after giving families a half-hour warning to escape, and hit an Orthodox Christian church where others had been sheltering, as it made clear that a command to invade Gaza was expected soon.

Since the onset of the Hamas-Israel conflict, bullion has added nearly $200 an ounce, and the precious metal has risen by 3.6% this week alone.

On the technical front, “failure to trigger a long overdue consolidation and correction back down towards $1,946 could see prices move higher to eventually challenge resistance around $2,075, the nominal record high from 2020,” Ole Hansen, head of commodity strategy at Saxo Bank, wrote in a note.

Traders also digested comments from Fed Chair Jerome Powell on Thursday, who left open the possible need for more rate hikes — which would increase the opportunity cost of holding zero-yield bullion — but also noted emerging risks and a need to move with care.

Commenting on the recent surge, Standard Chartered Bank precious metals analyst Suki Cooper told Bloomberg Markets earlier that “gold is a good value in the short term” given the heightened geopolitical risk.

(With files from Reuters)

No comments:

Post a Comment