Gold prices are set to reach a record high, with the precious metal on course to top £1,734 ($2,100) as the crisis in the Middle East deepens. The Israel-Hamas war has already pushed gold into gain mode, with prices surging over £132 ($160) in the days following Hamas’ incursion into Israel.
One expert believes that this price action will provide the gold bulls with the momentum needed to hit all-time highs. Sean Lusk, of brokerage firm Walsh Trading, says that the impact of the conflict will nullify the pressure gold has felt from the U.S. dollar and strong Treasury yields, creating space for huge price gains. It also means that we are likely to see a sustained rally, with no fall-back.
“We’ve seen previous rallies near £1,652 ($2,000) or just above it, with no follow-through, but you look at the contango in the market, it’s pretty strong,” Lusk said. “The projection is that we trade higher as we move forward.”
Lusk cites a range of factors now converging to support higher gold prices. One of the key fears is that the current conflict could expand beyond Israel and create instability across the region. “[With the] hospital bombing, and then people don’t want to meet with the President, that just fuels the flames, or the fears in this case, of further instability in the region,” he says. “Maybe this won’t only be centred around Gaza. It could explode in Lebanon; you’ve got Iran threatening people.”
In addition to concerns about a wider international conflict, there are a slew of domestic factors which are emerging as supportive for gold. This is also fuelling the bulls and providing additional momentum now that prices are ascending.
“You’ve got gasoline and energy prices headed up, you have credit cards that are getting maxed out. Consumer savings are pretty much used up. While the job market’s hanging in there fairly well, you’ve got strikes all over the place led by the United Auto Workers, and you’ve got wages probably rising more than they should due to these strikes. It’s all inflationary.”
What that means for gold prices is a clear path above £1,651 ($2,000). Lusk describes this as a perfect storm which allows gold’s safe-haven status to shine brightly.
He expands, “With those factors, if that’s not a perfect storm for precious metals or safer havens, I’m not sure what is anymore. We saw the run last week up to £1,607 ($1,946), market backed off, down £20 / $25 bucks, then made new highs. So, in that vein, this is bullish. It’s going to be close to £1,734 ($2,100), that’s where I can see this going. If you draw a line from the three-monthly highs since the pandemic, £1,703 ($2,063), then it continues, then £1,715 ($2,078), then £1,721 ($2,085). If you draw a line, that’s probably where it goes, just above it. That’s where I’m targeting this thing to go.”
With prices already increasing notably, there is no time to waste. Buy now.
