Market Analysis

Gold prices touch six-year high as Iran tensions simmer on

The price of spot gold reached a six-year trading high on Tuesday, as safe-haven demand for the yellow-metal increased due to the worsening geopolitical situation between Iran and the United States. Gold soared towards the $1,440 level, marking a stunning five percent increase in value in less than one week, before falling back slightly following a scheduled speak from Federal Reserve Chair Jerome Powell.

Major new economic sanctions imposed by the United States on Iran on Monday have left investors fleeing to safe-havens, making gold the preferred asset class. Many political analysts fear that U.S-Iran feud could quickly escalate, which in turn would have a significant impact on oil prices across and cause instability across the region.

Technical and investor buying has also increased since the Federal Reserve interest rate decision last week, which many market participants believed open-the-door for a series of rate cuts from the U.S central bank. Broad-based weakness in the U.S Dollar has also had a substantial impact on the price of gold over the last seven-days.

U.S central bank policy is well-known to have a huge effect on gold prices; the quantitative easing package announced by the Federal Reserve in 2008 caused gold prices to soar in value. Likewise, gold also rose in value when the Japanese and European central bank’s announced money printing operations.

The upcoming G20 leaders meeting is also likely to have an impact on the price of gold, particularly if President Trump and Chinese President Xi Jinping fail to find a resolution to the trade dispute. Traders will also be especially vigilant for any comments from President Trump about the Federal Reserve and the value of the U.S Dollar.


Gold Daily Mountain Chart |Source: ActivTrader

Gold Daily Mountain Chart |Source: ActivTrader


Looking at the technicals, key upcoming support for gold is found at the $1,400 and $1,385 levels, while extended weekly support is located around the $1,360 level. Key technical resistance is now located at the $1,430 and $1,439 levels, with a breakout above the $1,450 level exposing a possible move towards the $1,500 level.


Written by Nathan Batchelor, External Analyst, ActivTrades

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