GOLD MARKET ANALYSIS AND COMMENTARY - [Jun 16 - Jun 20]The unrest in the Middle East this week has boosted safe-haven demand for gold, pushing it above $3,400 an ounce.
While gold has broken several recent technical resistance levels, it is unlikely that it will hit a new record high next week. The ongoing conflict between Israel and Iran provides safe-haven support, but historically, gold rallies driven by geopolitical events tend to be short-lived.
Gold is currently outperforming the US dollar, which has struggled to attract safe-haven funds.
Iran launched a retaliatory airstrike on Israel on Friday night (June 13), Reuters reported. Air raid sirens sounded across Israel and authorities urged residents to take shelter in shelters.
The Israeli military said Iran fired nearly 100 missiles, most of which were intercepted or missed their targets.
Israel's Channel 12 reported two people were seriously injured, eight were moderately injured and 34 suffered shrapnel injuries.
Iran's Islamic Revolutionary Guard Corps said it had carried out military operations against dozens of targets in Israel.
The Iranian Revolutionary Guards' news website released a message that evening saying the "powerful and precise" counterattack was in retaliation for Israel's "invasion" of many parts of Iran and the killing of many senior military commanders, nuclear experts and Iranian civilians, including children.
Wider Middle East Conflict Could Erupt
Israel destroyed Tehran's military command system early Friday and struck key Iranian nuclear facilities. The Fars news agency, which is affiliated with Iran's Revolutionary Guards, cited data saying the Israeli attack killed dozens of people in Iran and wounded more than 300.
Israel has carried out large-scale airstrikes on multiple locations in Iran since early Friday, bombing Iranian nuclear facilities and military targets.
Reuters said Israel's attacks on Iran during the day and Iran's retaliation have raised concerns about a broader conflict in the region.
All Eyes on the Fed
While gold will continue to be affected by geopolitical developments, market attention will also be on the Federal Reserve, particularly Chairman Powell, who will speak after next week’s monetary policy meeting.
Economists generally expect the Fed to keep rates unchanged. However, expectations are growing that Powell could begin paving the way for a rate cut later this year.
The latest inflation data and signs of a slowing US economy have given the Federal Reserve room to cut rates. However, growing geopolitical uncertainty may prompt some market participants to adjust their expectations.
Overall assessment of the basic environment
The gold market in particular will still receive absolute support when there are too many risks appearing, from geopolitical developments to interest rate prospects, and tariffs. Major conflicts in the Middle East, Russia - Ukraine, trade war between the US and the rest of the world, ... are all sudden risk support that makes gold likely to surge in the short term. Therefore, in general vision, gold is considered the top safe-haven asset in the global unstable environment and it tends to increase in price in the current context.
Economic Data to Watch Next Week
Monday: State Manufacturing Survey, Bank of Japan Monetary Policy Meeting
Tuesday: US Retail Sales
Wednesday: US Weekly Jobless Claims, US Housing Starts, Federal Reserve Monetary Policy Meeting
Thursday: US Markets Closed for Black Lives Matter Day, Swiss National Bank Monetary Policy Meeting, Bank of England Monetary Policy Meeting
Friday: Philadelphia Fed Manufacturing Survey
Technical Outlook Analysis OANDA:XAUUSD
On the daily chart, gold has almost achieved all the bullish targets noted by readers in last week's weekly issue, initially at $3,371, then at the full price point and finally at $3,435. Gold can still continue to increase in price as technical conditions still absolutely support the short-term trend channel, while the long-term trend channel and the nearest support is the EMA21.
In terms of momentum, the Relative Strength Index (RSI) is sloping up after receiving support from 50 and is still far from overbought territory, indicating that there is still a lot of room for upside ahead.
To sum up, as long as gold remains within/above the price channel, it remains bullish in the short term. Any dips that do not break below the price channel should only be considered as short-term corrections or a new buying opportunity.
Finally, the notable positions will be listed as follows.
Support: 3,400 – 3,371 USD
Resistance: 3,435 – 3,500 USD
SELL XAUUSD PRICE 3497 - 3495⚡️
↠↠ Stop Loss 3501
BUY XAUUSD PRICE 3374 - 3376⚡️
↠↠ Stop Loss 3370
