Prices of the yellow metal gained traction this morning as conflict in the Middle East reached new heights. Late last week, Iran shot down an American surveillance drone and accused the US of incursion and spying over Iranian airspace, while the Pentagon said that the aircraft was in international airspace when it was targeted. The administration most recently accused Iran of last week's attacks on oil tankers in the Persian Gulf, which Tehran strongly denied involvement in the explosion. Meanwhile, a more dovish US Federal Reserve has supported the gold market while the US-China trade conflict continued to dent investor sentiment. On the Sino-US trade front, Trump announced last week that he would hold an “extended meeting” with Xi on the sidelines of the G20 summit in Japan. The two-day summit gets underway on Friday.
Gold prices regained traction this morning as they are retesting last week’s highs above the $1400 mark. The price is currently hovering between the $1401.62 support level and the $1410.78 resistance level as the momentum slows down a bit in the overbought zone. Despite the existing divergence between the momentum and the price, we will keep on focusing on the upside and this time the $1422.59 resistance level will be on our watch.
Support: 1401.62/ 1392.80
Resistance: 1410.78 / 1422.59