Gold Price News: Gold gains ground on Middle East tension

The latter half of last week saw gold recover most of the losses seen since the start of October, despite a rise in the US Dollar Index to a two-month high and a further firming of US rate expectations amid disappointing inflation data.

However, geopolitical tensions remain high, particularly with respect to the Middle East, where the market is bracing for another round of armed retaliation. This undoubtedly remains a support for the yellow metal. Gold starts the week trading at $2664/toz.

The CFTC Commitments of Traders (CoT) report published late on Friday saw gold speculators again pare their net long futures positions from the 54-month high recorded at the end of September, mirroring the recent lack of momentum in spot prices. However, net speculative longs remain at elevated levels. Conversely, aggregate ETF/ETC flows have turned negative over the last week, with net inflows to US vehicles being more than matched by net outflows elsewhere, perhaps prompted by stale bulls taking profits on local currency gold gains.

Looking at the gold chart, last week saw gold successfully defend rising minor oblique support at $2609/oz and close above the then 20-day Simple Moving Average at $2631/oz. Momentum has recovered somewhat, with a supportive RSI and a rather less bearish MACD, though both generated on somewhat weak trading volume.

Gold is currently retesting the upper bound of the 26 June/ 17 July/ 25 July ascending channel at $2663/oz with proximate support from the rising 20-day Simple Moving Average at $2635/oz and weak oblique ascending support at $2613/oz. Strong horizontal and rising oblique resistance remains at $2673/oz and $2706/oz, respectively. The 100% Fibonacci extension level is at $2710/oz, and the 161.8% Fibonacci level is at $2820/oz.

Today sees speeches from Fed officials Kashkari (hawk, non-voter) and Waller (centrist, voter) while tomorrow sees further comments from the Fed’s Daly (centrist, voter) and Kugler (dove, voter).