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The price of gold has risen for the fifth consecutive day amid the escalation of the war in the Middle East, which has disrupted global energy markets and pushed investors toward safer assets.
Yesterday, the price of the precious metal rose by 1.1%, surpassing $5,380 per ounce, showing an increase of more than 3% over the previous four sessions amid the heightened conflict in the region. President Donald Trump stated that the US will continue its military operation for as long as necessary, while Israel announced a wave of strikes on Iranian command centers. Tehran has attacked oil and gas infrastructure and threatened shipping in the strategically vital Strait of Hormuz. It is currently known that the strait is completely closed.
The sharp spike in energy prices has heightened concerns about inflation in the US, leading to a decline in the value of Treasury bonds and increasing the likelihood that the Federal Reserve will keep interest rates unchanged for a longer period. Against this backdrop, traders are pricing in a rate cut only by September, later than previously anticipated. Although higher rates could exert pressure on gold, which does not yield interest, they may also strengthen the role of the precious metal as a more effective store of value.
Even before the US-Israeli attacks on Iran over the past weekend, there were signs that inflation in the US was about to rise. According to the Institute for Supply Management, raw material prices for the manufacturing sector surged at the fastest pace since 2022 in February. JPMorgan Chase & Co. warned that inflation could become a serious issue for the US economy, fueling demand for gold.
It is worth noting that gold prices have risen nearly a quarter this year, driven by ongoing geopolitical and trade tensions, as well as concerns about the Fed's independence. If the conflict in the Middle East drags on, the precious metal has sufficient opportunities to challenge the record high of over $5,595 per ounce reached at the end of January this year. However, if the situation stabilizes, gold may lose some of its upward momentum.
Regarding the current technical picture of gold, buyers need to clear the nearest resistance at $5,317. This will allow them to target $5,416, above which it will be quite challenging to break through. The farthest target will be $5,526. If gold falls, bears will try to take control at $5,223. If successful, a breakout of this range will deal a significant blow to the bulls' positions and push gold down to a low of $5,137, with the prospect of reaching $5,051.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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