Gold prices surged to unprecedented levels this week as traders turned to the precious metal to hedge against escalating tensions between Israel and Iran. The region witnessed a deadly incident earlier in the week, resulting in the deaths of at least eleven Iranian individuals, including a high-ranking commander of the Islamic Revolutionary Guard Corps. Iran has since vowed retaliatory action against Israel, prompting concerns of further instability in the already volatile region. Reports indicate that Israel is bracing for imminent missile attacks from Iran, exacerbating political tensions between the two nations.
In times of geopolitical uncertainty, investors often seek refuge in gold due to its perceived safety and stability. The ongoing turmoil in the Middle East has contributed to mounting economic concerns and fears of inflation, bolstering the appeal of gold as a hedge against market volatility.
Simultaneously, geopolitical tensions have driven Brent crude oil prices to hit a significant milestone, reaching $90 per barrel. The escalation of geopolitical tensions has fueled apprehensions about global stability, amplifying the attractiveness of gold as a safe-haven asset.
Technical analysis also points to a bullish trend for gold, with a pennant pattern indicating further upward momentum. While this pattern has already unfolded, the downside for gold appears limited in the near term.
Looking ahead, the outlook for gold remains positive, contingent upon developments in the Middle East. The next major resistance level is anticipated at $2,500 per ounce, though achieving this milestone hinges on indicators such as the Commodity Channel Index (CCI) moving out of overbought territory. Initial support levels are identified at $2,300 per ounce, followed by recent lows and highs around $2,268 per ounce.
