Middle East tensions cause gold rush, prices poised to strike US$1,875

The escalating conflict in the Middle East could drive global gold prices to US$1,875 (67,950 baht) per ounce, as predicted by the Gold Traders Association (GTA).

The association’s president, Jitti Tangsithpakdi, pointed out that prices have risen by US$20-30 per ounce since the onset of hostilities between Israel and Hamas militants. Gold prices reached a one-week high of US$1,860 yesterday morning, October 11, and briefly touched US$1,870 later that day.

The GTA foresees gold trading within a range of US$1,845-1,875 in the short term unless the situation in the Middle East deteriorates further.

On Monday, gold prices experienced their most significant increase since July, driven by heightened demand for a haven in response to the intensifying tensions following Saturday’s terrorist attack by Hamas on Israel.

Spot gold, a crucial marker in the precious metals market, hit US$1,865.19 (approximately 67,595 Thai baht) on Tuesday, its highest level since 29 September.

Jitti reported the gold price rise is no surprise.

“Normally war causes gold prices to rise for three-four days after the conflict erupts. That happened when Russia invaded Ukraine last year.”

Gold prices

Conversely, domestic gold prices in Thailand fell by 150 baht to 32,250 baht per baht weight yesterday morning due to the Thai currency’s appreciation to 36.55 baht to the dollar. MTS Gold, a leading trader, has projected a global gold price resistance level of US$1,880 (68,130 baht) per ounce, with a support level of US$1,845 per ounce.

The domestic price is expected to encounter resistance at 32,300 baht per baht weight and to find support at 31,800 baht per baht weight said MTS Gold.

“Gold is likely to trade around US$1,860 per ounce as concerns are easing that the fighting between Israel and Hamas will not affect the global economy.”

Gold prices experienced a dip yesterday, partly due to a weakened dollar following suggestions by several US Federal Reserve officials that the recent surge in treasury yields might reduce the need for further rate hikes.

The dollar fell to almost a two-week low against a basket of currencies, mirroring the slide in US Treasury yields from their 2007 peak last week, reported Bangkok Post.

Neel Kashkari, president of the Minneapolis Fed, suggested on Tuesday that the recent rise in longer-term treasury yields could mean the US central bank might not need to increase rates as much.

Raphael Bostic, president of the Atlanta Fed, predicted no further US rate hikes. Higher rates increase the opportunity cost of holding gold, which is priced in dollars and does not yield any interest.

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