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The war in the Middle East intensifies because of a possible incursion by Hezbollah

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A senior Hamas representative in Lebanon told Politico that they are now coordinating with the Iranian-backed militant group Hezbollah. According to the representative, both militant groups have warned of “preemptive action against Israel.”

These remarks immensely raise the fear level as real concerns have emerged that the war in the Middle East could begin to escalate the military action on the borders of both Lebanon and the Gaza Strip. According to Ahmed Abdul-Hadi, the head of Hamas threatened that, “Hezbollah was now “geared for a major war” against Israel in the north, while Hamas would burst Israeli Prime Minister Benjamin Netanyahu’s “dream” of driving it out of Gaza.”

On the northern front, there is also evidence that Hezbollah, which is an Iranian-backed militia has entered the conflict with the tax on Israel emanating from the border of Lebanon. Occurring moments before President Biden landed for a visit to Israel. Originally President Biden planned to meet with Arab leaders in Jordan, but those were subsequently canceled after the incident.

Multiple haven assets react by gaining value in light of the current conflict

As of 5:00 PM EDT, the most active December 2023 contract of gold futures has gained $25.60 or 1.25% and is fixed at $1961.20. Gold’s gains occurred by overcoming dollar strength and still having a double-digit gain. Currently, the dollar is up 0.29%, which is a gain of 31 points, taking the dollar index to 106.355.

Spot gold is currently higher by $26.30 after factoring in dollar strength, which required subtracting $6.70. Without dollar strength, gold would have risen $33.00. Yields on U.S. Treasuries also had substantial gains in the 10, 20, and 30-year government bonds.

Current technical studies for gold indicate two important levels of resistance that gold must trade above on a closing basis if prices will at some point challenge and overtake $2000 per ounce. On Friday, September 1 gold traded to a high of $1980 the first level of resistance. Major resistance occurs at $2008 basis the most active December futures contract. This major resistance level is based upon a top that occurred on Monday, July 31.

Last Friday, gold’s dramatic double-digit gain resulted in pricing closing above the 50- and 200-day simple moving average. The closing price also matched the 100-day moving average. When all three moving averages of the short, interim, and long-term time cycles are all below current pricing, market technicians conclude that that commodity is in a solid bullish trend.

Wishing you as always good trading,

Gary S. Wagner - Executive Producer