Rising Safe-Haven Demand

Amidst the market fallout from the US/Israel attack on Iran over the weekend, gold prices have seen fresh safe-haven demand. The futures market is firmly in the green today having gapped higher at the open, now trading up almost 2% from Friday’s close. With the record highs now less than 5% away, the focus is on a fresh breakout in gold over coming sessions with the global geo-political backdrop unlikely to turn more risk-positive near-term. With Iran carrying out retaliatory attacks and signalling more to come, and Israel widening the scope of its attacks, Trump has warned the operation could continue for weeks. Against this backdrop, safe-haven demand looks set to remain (and indeed strengthen), favouring further upside in gold.

Bullish Risks

Gold prices had already been in firm demand over recent weeks amidst building speculation that such an attack on Iran might materialise. With the US now engaged, incoming headlines will be key for price direction with gold likely to rise furtehr on any news of an escalation in the conflict. Given the dominance of this issue for traders, gold prices are only likely to fall near-term if we see Iran surrendering or the US/Israel scaling back their attacks and/or signalling the start of negotiations. For now, at least, this looks unlikely and gold prices should continue to rally on safe-haven inflows accordingly.

Technical Views

Gold

The rally in gold has seen the market breaking out above the bull channel highs with the rally through 5,113 gathering steam now. The ATH around 5,603.83 will be the key focus near-term with bulls looking for a fresh breakout in line with bullish momentum studies readings. Only a move back below the 5,113.51 level will alleviate near-term bullishness.