Gold prices rallied over 1% on Tuesday, driven by heightened tensions in the Middle East following Iran’s attack on Israel. This escalation in the conflict overshadowed positive US economic data and strengthened the safe-haven appeal of gold.
Key Developments:
- Iran’s Attack on Israel: Iran launched nearly 200 missiles at Israel in response to Israel’s attack on Hezbollah.
- US Response: The US condemned Iran’s attack and warned of severe consequences.
- Market Sentiment: Risk aversion increased as investors focused on the geopolitical tensions, shifting their attention from positive US economic data.
Economic Indicators:
- JOLTS Job Openings: The August Job Openings & Labor Turnover Survey (JOLTS) showed an increase in job openings, exceeding expectations.
- ISM Manufacturing PMI: The ISM Manufacturing PMI for September remained unchanged at 47.2, falling short of estimates.
Fed Rate Expectations:
The CME FedWatch Tool suggests a higher probability of a 25 basis point rate cut at the next Fed meeting, with a lower probability of a larger 50 basis point cut.
Gold Technical Analysis:
- Gold prices surged above $2,660, with potential for further gains if it breaks above the all-time high of $2,685.
- However, a daily close below $2,665 could signal a pullback.
- Support levels are at $2,650, $2,600, and $2,546.
