The price of gold rises as tensions rise in the Middle East

• Gold is up more than 1% after Iran fired missiles at Israel, escalating the conflict in the Middle East.
• Market focus is shifting from strong US jobs data to geopolitical uncertainty, fueling risk aversion and fueling demand for safe-haven gold.
• A daily close below $2,665 could trigger a pullback, but continued tensions maintain bullish momentum for new highs.

The price of gold rose more than 1 percent on Tuesday amid rising tensions in the Middle East, as Israel’s attack on Hezbollah spurred a response from Iran, which launched nearly two hundred missiles. This sponsored an advance in the hard metal, shrugging off the overall strength of the US dollar. At the time of writing, XAU/USD is trading at $2,662 after rebounding from daily lows of $2,632.

Risk aversion is the name of the game as investors’ focus shifted from better-than-expected US jobs data to steady business activity in the manufacturing sector, according to the Institute for Supply Management (ISM).

Newswires revealed that Iran attacked Israel. According to ABC sources, Iran will launch 240-250 missiles towards Israel. Meanwhile, Israel revealed that its air force would continue to strike targets in Lebanon, while US national security adviser Sullivan said: “There will be serious consequences for this attack.”

Kitco analyst Jim Wyckoff wrote: “Gold prices are very likely to hit new highs if Iran hits Israel. Silver prices would likely hit new highs for the move.”

Gold prices extended their gains, printing a weekly high of $2,673. However, a daily close below the September 30 high of $2,665 could open the door for a pullback if geopolitical risks calm.

The greenback, as measured by the U.S. dollar index ( DXY ), rose 0.43% to 101.19, capping gains in non-performing metals.

Daily Market Reasons: Gold price rises amid Middle East hostilities

• The US Labor Department revealed that the August Job Openings and Turnover Survey (JOLTS) rose from 7.711 million to 8.04 million, beating estimates of 7.655 million.
• The ISM Manufacturing PMI for September was steady at 47.2, unchanged from the previous reading but below estimates of 47.5.
• Market participants placed the odds of a 25 bps rate cut at 61.6%. According to the CME FedWatch tool, the odds of a cut of more than 50 bps fell to 38.4%.

XAU/USD Technical Analysis: Gold price climbs above $2,660

Gold price reversed Monday’s pullback to $2,624 amid risk aversion. An escalation of conflict in the Middle East could pave the way for higher prices. Although momentum favors buyers, as depicted by the Relative Strength Index (RSI), downside risks remain.

If Gold breaks the all-time high of $2,685, it could extend gains to $2,700. Conversely, if XAU/USD breaks below $2,650, the door has opened to test the September 18 daily high at $2,600. Once relinquished, the next support will be the September 18 low of $2,546, followed by the 50-day Simple Moving Average (SMA) at $2,503.