Gold Surges as Geopolitical Tensions and Economic Concerns Drive Demand
In Monday's Asian market session, spot gold experienced a sharp upward movement, breaking through $2,731 per ounce and touching a new all-time high of $2,731.43 per ounce. This surge is attributed to escalating geopolitical tensions and rising concerns regarding the U.S. elections, which have driven demand for safe-haven assets.
The recent surge in gold prices follows heightened tensions in the Middle East. On October 20, reports indicated that an Israeli official confirmed Israel's response to Iranian missile attacks was "nailed on the head." Furthermore, it was reported that the recent drone attack on Israeli Prime Minister Benjamin Netanyahu's residence would not impact the timing or scale of Israel's anticipated retaliation against Iran.
Christian Borjon Valencia, an analyst from FXStreet, noted that gold prices climbed as Hezbollah announced an escalation of conflict with Israel, stating that they had entered a "new phase of escalation." This announcement contributed to increased demand for gold as a safe-haven asset. On Friday, spot gold closed up by $28.64, or 1.06%, at $2,721.38 per ounce.
Adding to the geopolitical tension, Bloomberg reported on Monday that a drone attack by Hezbollah near Netanyahu's residence further fueled uncertainty. Although Netanyahu and his wife were unharmed, the incident has bolstered Israel's resolve to retaliate. Prime Minister Netanyahu declared that Iran's actions through Hezbollah were a "serious mistake."
Concerns about the upcoming U.S. presidential election and expectations of monetary easing by the Federal Reserve have also contributed to the upward pressure on gold prices. Alexander Zumpfe, a trader at Heraeus Metals Germany, commented that both geopolitical instability and economic concerns are pushing gold higher. The Federal Reserve is widely expected to cut interest rates by 25 basis points at its November meeting, with the CME's FedWatch tool showing a 92.9% probability of a rate cut.
From a technical perspective, Valencia suggested that the momentum for gold remains strong. The Relative Strength Index (RSI) indicates an overbought scenario but shows no immediate signs of a pullback. Valencia pointed out that the first resistance level for gold is at $2,750 per ounce, followed by $2,800 per ounce. Conversely, a drop below $2,700 per ounce could trigger a retracement to support levels of $2,696 and $2,670 per ounce.
As of 11:00 GMT, spot gold was quoted at $2,731.10 per ounce.
