- Summary:
- Gold price is on a renewed impetus as the market readjusts to escalating war scenarios in the Middle East and between Russia and Ukraine.
Gold price has stayed up for the second successive session, hitting two-week highs of $3,387 per ounce at the spot market after rising by 1.2% on the daily chart. The yellow metal’s newfound upward momentum is attributed to the rising concerns over geopolitical tensions in the Middle East and escalating Russia-Ukraine war. In addition, there remains uncertainty over the trajectory of the US economy.
Israel’s cabinet last week approved renewed military action to reoccupy Gaza. The move could displace as many as 2.5 million people and is likely to trigger an escalation of military confrontation in the Middle East region. That scenario sets up gold prices for a strong upward trajectory in the coming days and weeks.
Elsewhere, Ukraine conducted drone attacks for the second night on Russia on Monday, forcing the closure of all airports in Moscow. The attacks have cast doubt on the success of US-led negotiations aimed at ending the war that has entered its 1,168th day.
The Federal Reserve will hold its interest rate meeting starting Wednesday. The central bank’s Chairman Jerome Powell is under pressure from President Donald Trump to lower interest rates. However, there’s a delicate balance between taming tariff-fueled inflation. As a result, analysts forecast that the Fed will keep interest rates unchanged at 4.25%-4.5%.
Gold Price Forecast
Gold price momentum favours it to stay on the upside if action is kept above the $3,360 pivot mark. The metal will likely meet the first resistance at $3,389. An extended control by the buyers will take the action higher and could encounter the second hurdle at $3,410.
Conversely, going below $3,360 will shift the momentum to the downside. The first support will likely be at $3,337. The upside narrative will be invalid if the price breaks below that mark. In addition, the resulting momentum could take the action lower to test $3,310.
