Gold Prices Surge Amidst Global Tensions and Economic Uncertainty

By Camilo Botia, CSC?

The price of gold continues to linger around the $2,000 mark following a substantial surge due to the clash between Hamas and Israel. Investors persist in using gold to hedge against macroeconomic uncertainties, further solidifying gold's reputation as a haven.

Gold continues to ascend following two weeks of consecutive profits, spurred by escalating global conflict fears due to the standoff between Hamas and Israel. Gold prices have seen a nearly 9% increase in October alone, closing on Monday. This underscores the significance of gold as a haven asset investors utilize to hedge against risk.

On Friday, gold neared the $2,000 per ounce mark following the announcement by Iran-backed Hezbollah that it had targeted several locations in Israel with guided missiles. Despite this, the non-interest-bearing metal is still subject to challenges from stricter US monetary policy, which has increased bond yields and diminished its appeal. Some analysts believe that the potential for gold prices to rise further hinges on the future of US interest rates and a possible halt in their growth.

The sharp increase in the price led to a break of the 100-day moving average in mid-October, which acted as a significant resistance since late July, something that also increased the volatility of gold significantly, reflected by the increase in the distance of the Bollinger bands (the upper band has separated abruptly from the lower band). If there continues to be uncertainty in the market and the likeliness of a more significant conflict persists, the price of gold could reach new highs (as it generally does whenever the world is on the brink), where the $2,000 level is the closest resistance for the price and is close to coinciding with the upper Bollinger band. Higher up, the $2,067 level is the furthest resistance and the highest price for gold in 2023.

On the contrary, if the price trades lower, at the bottom of the chart, the most important support is the 100-day moving average, currently at $1,922.92; lower down, we find two additional levels, support at $1,900, and finally, the base of the bands at $1,886.50.

Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.

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