Gold edged higher, extending its first weekly gain since the Middle East conflict began, as buyers stepped in after recent declines. Prices showed resilience even as oil rose and equities weakened, suggesting dip-buying is supporting the market. The escalation of the conflict, including involvement from Iran-backed groups and increased US military presence, has added uncertainty around how long the war will last. At the same time, ongoing attacks across the region are reinforcing fears of a prolonged crisis. Despite the bounce, gold is still down roughly 14% since the war started. Pressure has come from rising inflation expectations, reduced chances of rate cuts, and concerns that central banks may sell reserves and keep tightening policy. There is also a broader liquidity squeeze weighing on prices. If growth slows sharply, lower bond yields could support gold by reducing the cost of holding it, but in the short term, risks remain to the downside, especially if central banks continue selling and investors keep cutting positions.
From a technical point of view, gold has reached a plateau around $4,500, trading in this area for the past week. The Stochastic oscillator is in neutral territory, suggesting the price could move in either direction, while the Bollinger bands are quite expanded, indicating volatility that could support sharp short-term moves. Despite the recent selloff, the moving averages are still validating an overall bullish trend in the market. For the time being, the 61.8% and 78.6% Fibonacci retracement levels appear to be the upper and lower boundaries of the sideways channel, respectively, but if there is a valid break above 61.8%, the price could continue higher toward $4,800, which is a first major technical resistance area. On the other hand, if the price breaks below $4,285, then the next support level might be seen aroun $4,000.
Disclaimer: The opinions in this article are personal to the writer and do not reflect those of Exness