Gold futures break above $2400 as geopolitical tensions escalate

As of 7:00 PM EDT, gold futures basis the most active April 2024 contract is trading just above $2400 at $2401.40. This is a net gain of $2.30 on top of the $39 gain from Monday’s trading in New York. Substantial Today’s gains have set a new record high settlement for gold futures. Spot gold also gained $39 taking the price of a troy ounce to 2383.05. Spot gold is currently fixed at $2384.47.

Today’s strong gains can be directly attributed to rising Middle East tensions after Iran's massive military salvo of more than 300 missiles and drones into Israel this weekend.

According to the Associated Press, “Iran may have managed to strike a balance between retaliating publicly and avoiding provoking further Israeli military action and setting off a much wider conflict. Mona Yacoubian, vice president of the Middle East and North Africa center at the U.S. Institute of Peace said of the situation: ‘Both (Iran and Israel) are able at this point to claim victory and step down off the precipice, particularly since there were no Israeli civilians killed.” 

However, this view is quite different from comments by SP Angel in an email dispatch, “Iran has been threatening to annihilate Israel for many years and it is only a matter of time before Iran develops its nuclear arsenal. The hard-line Netanyahu government will, almost inevitably, hit back at Iran in an attempt to slow its nuclear program, change its regime, and reduce the capacity of the Iranian Revolutionary Guard. Members of the Israel cabinet are reported to be pushing for a powerful retaliatory strike as a deterrence, though the U.S. has stated it will not help Israel retaliate against Iran. We suspect the retaliatory attack will come sooner rather than later.”

According to Bart Melek, the TD Securities head of commodity strategies, “Monday's gold price move looks geopolitically driven, likely related to statements from Israel that it will respond to Iran's weekend drones and missile attack that has stoked fears of a broader regional conflict.”

On a technical basis, Friday’s intraday high of $2448.50 remains as current resistance. Gold pricing traded to an intraday low of $2340.20, and a high of $2404.30. As gold hovers around $2400 per ounce in Australia, the current futures pricing could become a new level of support.

Wishing you as always good trading,