Gold price rallies on safe-haven demand amid Middle East crisis

AM-PM Roundup

(Kitco News) - Gold prices are solidly higher in early U.S. trading Monday, following the surprise Hamas attack on Israel over the weekend. Safe-haven demand is featured as the world has just seen an unexpected major geopolitical shock that has traders and investors spooked. December gold was las up $18.40 at $1,863.40 and December silver was up $0.047 at $21.77.

Asian and European stocks were mostly lower overnight. U.S. stock indexes are pointed to lower openings when the New York day session begins. The marketplace is unnerved following the weekend Hamas raid on Israel that killed hundreds of civilians and hostages taken. Israel retaliated harshly and declared war on Hamas. This is the largest act of violence seen in Israel in 50 years. Risk aversion is high to start the trading week, as the ramifications of the weekend attack by Hamas are huge, both politically and economically. The U.S. is building up its military presence in the Middle East region.

The major Middle East conflict will likely in the coming months impact major economies, including affecting central bank policies. There is also speculation the Israel war with Hamas may even impact the U.S. Congress and the process of selecting a new Speaker of the House of Representatives.

The U.S. government is closed for a federal holiday Monday, so the U.S. Treasury market is closed. However, most markets are open today, including the U.S. Treasury futures markets.

The U.S. dollar and U.S. Treasuries are also seeing “flight-to-quality” buying amid the geopolitical crisis. Nymex crude oil prices are sharply higher and trading around $85.50 a barrel. The yield on the benchmark U.S. Treasury 10-year note yield is presently fetching 4.795%.

U.S. economic data due for release Monday includes the employment trends index.

Technically, the gold futures bears still have the firm overall near-term technical advantage. However, Friday’s “outside day” up on the daily chart and then Monday’s gap-higher price move are early clues that a market bottom is in place. Prices are in a four-month-old downtrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at $1,900.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,800.00. First resistance is seen at the overnight high of $1,869.50 and then at $1,875.00. First support is seen at $1,850.00 and then at last week’s low of $1,823.50. Wyckoff's Market Rating: 2.5.

The silver bears still have the firm overall near-term technical advantage. Prices are still trending lower on the daily bar chart. Silver bulls' next upside price objective is closing December futures prices above solid technical resistance at $23.00. The next downside price objective for the bears is closing prices below solid support at $20.00. First resistance is seen at $22.00 and then at the overnight high of $22.18. Next support is seen at $21.50 and then at $21.25. Wyckoff's Market Rating: 2.5.

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