Gold Surges as the Bulls Gain Control
The gold market is off to a slow start this week as the metal saw a slight decline on Monday. Spot gold is down a few bucks after the close of the day session, in what appeared to be a calmer, more quiet trade. The bulls seem to be taking a break today and could continue to do so in the days ahead. Of course, the market action will likely be largely determined by any new events in Israel or news out of Ukraine or elsewhere.
The gold market has had a solid run higher in recent days and a period of consolidation is not unexpected. The recent run-up in gold may now see some profit-taking or some sideways price action before being able to make a sustainable move higher from current levels. The market is taking a breather today not far from the key $2,000 level. This is the area that the bulls just attack and overcome to attract fresh buyers into the market. A breakout above the $2,000 level on a closing basis could signal larger gains ahead, and the yellow metal could find itself headed for previous all-time highs in a hurry.
The gold market will take its cues from any new developments concerning the Israeli/Hamas war. Israel is reportedly gearing up to launch a ground invasion into Gaza at any time now. Such an invasion could take the war to another level entirely, as the Gaza strip is full of citizens and non-combatants. Thus far, no other nations have gotten directly involved in the conflict. If that were to change, however, the war could turn into World War III and do so quickly. Any Iranian involvement, in particular, could draw the U.S. directly into the fold. The United States already has two aircraft carriers in the region, including its largest vessel the USS Gerald Ford. These attack groups have the ability to launch tremendous firepower and launch it rapidly. It is unknown if the U.S. has plans to attack Hamas, but if it does, look out below.
Any airstrikes launched by the United States could have a dramatic impact on the gold market and other financial markets as well. Gold could see a rapid rise higher as panicky investors turn to it for its perceived safety. U.S. airstrikes or another unforeseen event has the potential to light a fire under gold. This fire could propel the yellow metal far-beyond previous all-time highs and into fresh high territory. With no upside chart resistance to keep a lid on the buying, the bulls could have a field day as gold potentially takes off, possibly never to return to current price levels.
The bulls have taken control of the gold market as prices hit a 10-week high last week. The trend is now higher instead of lower, and the bulls will be eyeing the $2,000 in the days ahead.