The week started with a surge in gold prices, climbing nearly 1%, driven by the escalating conflict in the Middle East involving Israel and the Palestinian militant group Hamas.
The week kicked off with a surge in gold prices, climbing nearly 1%, driven by the escalating conflict in the Middle East involving Israel and Palestinian militant group, Hamas. Simultaneously, oil prices recovered, jumping more than 4% after a significant weekly drop.
Rattled by geopolitical tensions, investors sought refuge in precious metals and commodities. The dollar has responded positively to the war as traders seek safe haven currency. The dollar initially found strength from a positive Nonfarm Payroll report, a high unemployment rate and lacklustre average hourly earnings data curbed gains. In addition, the war outbreak in the Middle East cast a shadow over equity markets, grappling with bearish sentiment yet still finding some support.
Dollar Index
The US Dollar experienced significant volatilities while retreated from crucial resistance level amid mixed economic data. The US Bureau of Labor Statistics reported disappointing figures for Average Hourly Earnings (0.20%) and the Unemployment Rate (3.80%), both falling short of market expectations. However, the silver lining came in the form of Nonfarm Payrolls, which exceeded projections with a robust figure of 336K, far surpassing the anticipated 170K. Nonetheless, rising geopolitical tensions due to the Israel-Hamas conflict had sparked demand for a safe-haven dollar.
The Dollar Index is trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 58, suggesting the index might extend its losses toward support level since the RSI retreated sharply from overbought territory.
XAU/USD
Hamas and Islamic Jihad’s sudden and aggressive offensive against Israel has reverberated through global geopolitics, amplifying uncertainty and compelling investors to seek refuge in safe-haven assets, notably gold and the US dollar. The rapid escalation of violence has introduced a heightened layer of geopolitical risk, prompting a cautious approach in financial markets.
Gold prices are trading higher following the prior breakout above the previous resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 68, suggesting the commodity might extend its gains since the RSI stays above the midline.
