#Middle East situation# #Gold technical analysis# 24K99 news, affected by the escalating Middle East tension, spot gold soared more than $40 on Monday (August 12), closing above $2470 / ounce. The current target of gold bulls is to impact historical highs.
Spot gold soared $40.74 on Monday, up 1.68%, to $2471.36 / ounce.
FXStreet analyst Christian Borjon Valencia pointed out that with the decline in US Treasury yields, gold prices rose more than 1% in the North American market on Monday. In addition, the continuing tensions in the Middle East and the lack of ceasefire between Israel, Lebanon and Iran have driven the demand for gold as a safe haven.
Before the important US inflation data is released this week, US Treasury yields fell on Monday, and the yield of the 10-year benchmark US Treasury bond fell 4 basis points to 3.902%.
According to the Dawn Securities report: "No matter how you look at it, gold is a hot trade right now. Wall Street is bullish unanimously."
The market is also focusing on Tuesday's producer price index (PPI) data and Wednesday's consumer price (CPI) data to obtain the latest clues on the prospect of Fed interest rate cuts.
According to the CME Group's "FedWatch" tool, the market expects a 49% chance that the Fed will cut interest rates by 50 basis points in September.
Gold is considered a tool to hedge geopolitical and economic uncertainty and often flourishes in a low interest rate environment.
Iran may attack Israel within 24 hours
According to Fox News, local time on Monday (August 12), Western countries issued a joint statement warning Iran and its allies not to launch attacks that may further exacerbate tensions in the Middle East. The tension in the Middle East seems to be on the brink of collapse soon.
Middle East sources told reporters on Monday that they are concerned that Iran and its proxies may attack Israel within the next 24 hours in retaliation for events last month when Haniya was killed in Tehran.
White House National Security Council spokesman Corby said on Monday that the United States is ready to respond to a major attack that Iran or its Middle Eastern proxies may launch this week.
Corby said: "We share the same concerns and expectations with Israel about the timing of a possible attack by Iran, which could happen this week. We must be prepared for a series of significant attacks that may occur." Corby's comments are the strongest suggestion by officials that they expect an attack to occur at any time.
According to the news from insiders cited by the Israel Times, on August 12, local time, Israeli Defense Minister Gantz and US Defense Secretary Austin had a conversation. Gantz revealed that Iran's military preparations showed that Iran was preparing to launch a "massive attack" on Israel.
According to reports, the latest assessment on Israel's side is that Iran plans to launch a massive attack on Israel this week, quoted by Israel's public broadcasting company and other foreign media.
The Israel public broadcasting company predicts that the scale of this attack will be larger than Iran's drone and missile attacks on Israel in April, but the source has not been revealed.
According to foreign media quoting unnamed sources, Iran and the Hezbollah in Lebanon may launch joint attacks on Israel at the same time or in sequence.
According to Axios, a US news website, two informed sources told Axios that, based on the latest assessment of Israel's intelligence community, Iran has decided to launch a direct attack on Israel to retaliate for the assassination of Hamas political bureau leader Hania in Tehran and may take action within a few days.
According to FXStreet analyst Christian Borjon Valencia, as the situation in the Middle East continues to deteriorate, market sentiment is beginning to deteriorate. The lack of efforts by Israel, Lebanon, and Iran to reach a ceasefire has made market participants feel uneasy. As the conflict may escalate, it has sparked an escape from the safe haven of gold.
Kitco Metals senior analyst Jim Wycoff said: "What is visible in today's gold and silver markets is that the bullish chart brings some price support, triggering some technical buying. The intensified tensions in the Middle East have also brought some hedging demand."
How to trade gold?
Valencia pointed out that the gold price continued to rise on Monday, approaching the historical high of $2483 / ounce, and if the US inflation is lower than expected, the gold price may test this high.
US July CPI is expected to drop from 3% to 2.9% year-on-year, and core CPI is expected to drop from 3.3% to 3.2% year-on-year.
Valencia said that the momentum is favorable for gold buyers, which is reflected in the relative strength index (RSI), which is higher than the midline and has a higher target level.
Valencia said that the first resistance for gold buyers will be the historical high of $2483 / ounce. Once this level is overcome, the next challenge will be to break through the psychological barrier of $2500 / ounce.
If the gold price breaks through the above psychological barrier, it is expected to continue to rise, with the next target being $2550 / ounce, followed by $2600 / ounce.
(Spot gold daily chart source: FXStreet)
On the downside, if the gold price falls below $2,450 per ounce, the next resistance will be $2,400 per ounce, followed by the 50-day simple moving average (SMA) at $2,373 per ounce.
Once the above moving averages are breached, the downward trend in gold prices may intensify, leading to a drop in gold prices to the 100-day moving average of $2,352 per ounce, followed by trendlines of support near $2,320 per ounce.