The gold market has been interesting to watch in recent days, and that interest could be set to continue. Following the Hamas attack against Israel last weekend, the conflict has turned center stage for financial markets and could be gearing up to take a turn for the worse. The war has already taken thousands of lives and has led to many being taken prisoner. An expected ground invasion of the Gaza strip by Israel may lead to more bloodshed and chaos as the nation looks to protect itself from aggression. The war between Israel and Hamas may have many surprises that could be market moving in the weeks and months ahead.
Gold’s Sideways Movement Under Treasury Rates Pressure
The precious metals bulls are holding their own today as gold takes a consolidative turn. A day or several days of slight gold price movements should not be unexpected at this point, given the recent strong gains the market has seen. Gold could, in fact, spend several weeks or more moving sideways if no new catalysts are introduced into the marketplace. The only factor currently keeping a lid on gold may be the high treasury interest rates. The yield of the benchmark 10-Year Treasury Note is 4.765%. A move towards the 5% area could be seen in the coming weeks as investors look for perceived safety against the backdrop of military conflict. Those rising yields may keep investors turning away from gold and metals, while boosting the prices of bonds and treasuries.
Gold Bulls Eye $2,000 Breakout, While Bears Target $1,800
The gold bears still have control of the market on the gold price daily chart. That control has been weakened significantly in recent action, however, and could be demonstrating that a bottom is now in place. The bullish momentum in the market could continue until the Middle East fighting is resolved, and investors may turn to gold as a flight to safety. makes it desirable for investors. The bulls are eyeing the $2,000 level. A breakout above this level, on a closing basis, could set the stage for a renewed push higher in gold. Many bullish investors may simply be taking a wait and see approach before jumping back into the market. A close above this area could give the all-clear signal to more bulls, and momentum could then take the market sharply higher from there in a brief period of time. The bears are looking to take the market below the $1,800 level. A close below this key area could signal the bears that more downside is likely and that could attract more sellers into the marketplace.
Economic Data, Fed Speeches and Israeli-Hamas Conflict Make a Busy Week for Markets
Tuesday is a busy day from an economic data standpoint. The markets will get the latest readings of the Johnson Redbook retail sales report, industrial production and capacity utilization, retail sales, the NAHB housing market index and more. In addition to the heavy slate of data to be released, there are also several Fed officials that will be speaking today.
Market participants will pay close attention to the Israeli/Hamas conflict in the weeks ahead. Any signs that the U.S., Iran or other nations could get involved may drive gold sharply higher and do so in a hurry. A calming down of the conflict could have the opposite effect, however, and could dampen the bullishness that has been seen in gold in recent days.