Gold prices surged at the beginning of the week to all-time nominal highs. During American trading hours, they touched an astounding high of about $4,400. As geopolitical tensions in the Middle East escalate, the market is clamoring for the precious metal, driving up demand as investors flock to the appealing safe haven. Especially given that gold is now skyrocketing, up a healthy 2.3% on the daily chart. This robust momentum means it has room to grow even more.
Gold prices skyrocket as investors become ever more risk averse. This change is the result of growing turf wars in the Middle East. Notably, Israeli Prime Minister Benjamin Netanyahu’s recent announcement regarding a briefing with U.S. President Donald Trump about potential options for resuming attacks on Iran has created an atmosphere of uncertainty. This uncertainty usually leaves investors the flight to safety with gold, pushing the price even higher.
At the moment, the spot price of gold is trading above its 20-day SMA. The SMA is currently fixed at $4,250.69. This level acts as very important dynamic support, implying that the price can probably continue moving higher. The 20-day SMA is at $4,355.45, offering short-term support too. The 20-day SMA is now clearly moving above the 100-day and 200-day SMAs as well. Having all of these indicators in alignment makes for a powerful bullish trend heading into the market. Gold prices remain well anchored above all three moving averages.
The Relative Strength Index (RSI) for gold has recently shot to an extraordinary 76, a sign of buying that is highly bullish. The Momentum indicator is trending positively, well above its midline, with the RSI climbing to 78 without showing signs of exhaustion despite being in overbought territory. Analysts are watching for a complete loss of upward momentum in the Momentum indicator. That recent history indicates that despite strong underlying trends today, a pause or pullback may be approaching.
As market analysts are fond of saying, the moment prices start to fall, demand from buyers will flood the market. This phenomenon in itself would be expected to bolster gold prices further. This tendency tracks with historical precedent as investors often take advantage of lower price points during times of flux.
Investors should remain vigilant and attuned to changing market conditions, since the nature of these evolving geopolitical developments can quickly shape trading behavior.