Gold prices surged over 1% on Tuesday as tensions in the Middle East escalated, following Israel's attack on Hezbollah and Iran's retaliation, which involved launching nearly two hundred missiles. This situation provided a boost for the non-yielding metal, allowing it to rise despite the overall strength of the US Dollar. At the time of this report, XAU/USD was trading at $2,662 after recovering from daily lows of $2,632.
Investor sentiment has shifted towards risk aversion, moving away from the positive US jobs data to a more stable outlook for business activity in the manufacturing sector, as noted by the Institute for Supply Management (ISM).
Reports indicated that Iran has targeted Israel, with sources from ABC stating that Iran plans to fire 240-250 missiles at Israel. Meanwhile, Israel announced that its air force would continue its strikes in Lebanon, and US National Security Adviser Sullivan warned of severe consequences for the attacks.
Kitco Analyst Jim Wyckoff commented that if Iran proceeds with its strikes on Israel, gold prices are likely to reach new record highs, with silver also expected to follow suit. Gold prices continued to rise, reaching a weekly peak of $2,673. However, if gold closes below the September 30 high of $2,665, it could signal a pullback if geopolitical tensions ease.
The US Dollar Index (DXY) rose by 0.43% to 101.19, which limited the rally in gold prices.
