Gold price was rejected near its all-time-high price at $2,729 on Tuesday, having risen by 0.6 percent at the time of writing. The yellow metal is propelled by rising safe haven demand underpinned by uncertainty surrounding the Middle East conflict. However, rising US treasury bond yields will put a lid on gains by non-yielding gold.
The Middle East conflict has taken centre stage in defining gold prices this week, as news emerged that Israel could be moving its military assets in readiness for a retaliatory strike against Iran. News outlets widely reported last week that classified US intelligence documents leaked online showed Israel’s preparations against Iran. That has raised speculation that an escalation in the conflict could happen any minute, raising the safe haven demand for gold.
On the other hand, yields on benchmark ten-year US treasury bonds have returned to the upside this week. Returns on the government-issued assets were at 4.2 percent at the time of writing-the highest level in twelve weeks. That limits gold’s attractiveness to investors, thus adding downward pressure on its price. Also, the US dollar is strengthened by the upturn in the bond yields, with the DXY index staying near three-month highs.
The momentum on gold price points to bullish control and calls for further upside above the pivot mark at 2,729. That will likely see the price rise to encounter the first resistance at 2,734. However, a sustained upward momentum could breach that mark to potentially test 2,740.
On the other hand, a move below 2,729 will favour the buyers to take control. In that case, initial support will likely be at 2,724, but an extended bearish momentum could break below that level. That will invalidate the upside narrative and could extend the decline to test the next support at 2,720.
This post was last modified on Oct 22, 2024, 13:18 BST 13:18