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Gold prices continue to push higher through the back end of the week as prevailing uncertainty around the conflict in the Middle East continues to drive safe-haven flows. For now, Israel is refraining from launching a full-scale ground invasion of Gaza and President Biden has brokered a deal with Israel to allow for humanitarian aid to enter the besieged region. While these can be seen as somewhat positive developments, Netanyahu’s order to step up IDF bombing of Hezbollah targets on the Lebanon border is a worrying sign. Fears that the current conflict will eventually lead to a wider-scale conflict involving Iran are keeping safe-haven flows intact here.
 

Powell on Watch

Looking ahead this week, along with the situation in the Middle East, traders will also be watching for the latest comments from Powell due later today. Market pricing for a December/January rate hike has crept up in recent days on the back of better-than-forecast US data and some hawkish Fed commentary. If Powell is seen leaning to the hawkish side today, keeping rate hike expectations supported, this should see USD and US yields continue higher near-term.  In this scenario, gold prices might stall without any fresh escalation in the Middle East conflict.
 

Technical Views

Gold

The rally in gold prices off the 1805.18 level has seen the market breaking higher by around 9%. Now trading above the broken bull channel and the 1905.46 level, focus is on a test of the 1973.51 level next. With momentum studies bullish, the outlook remains in favour of a breakout in the coming sessions unless Powell’s speech drives a reversal today. 

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