By David Brough
Gold prices fell to just over $1,913 per ounce on October 16 on technical selling after a 3.4 percent rally in the prior session driven mainly by the Israel-Hamas war which ignited the yellow metal’s appeal as a “safe haven.”
During times of extreme geopolitical uncertainty, gold can act as a safe haven for investors.
If the fighting in the Middle East escalates further in the coming days, exacerbating uncertainty around the world, gold prices could rally again, and could at some point test $2,000 per ounce, analysts said.
On the other hand, if the geopolitical situation stabilises to some degree, gold could pull back towards support around $1,900.
Furthermore, sentiment that U.S. monetary authorities could be at the end of their interest rate hiking cycle, has also underpinned gold prices.
If the markets were to expect U.S. rates to go higher, gold prices could lose ground as bullion bears no yield.
So the current situation in which U.S. rates could start easing in coming months, perhaps next year, can be constructive for gold prices.
“I am bullish on gold for the coming week,” Colin Cieszynski, chief market strategist at SIA Wealth Management, told Kitco News.
“With the war drums pounding louder, precious metals may continue to attract renewed interest in their haven for capital role.”
(Disclaimer: Any views expressed in this article are solely those of the author and should not be construed as investment advice.)