War is ugly, but that is exactly what has kept the Middle East at knife-edge currently with Israel now looking at a potential all-out battle with Iran and its proxy Hezbollah in Lebanon. At the same time, the ceasefire scenario between Israel and Gaza is still uncertain and unknown. Amidst such, gold and silver prices are likely to be ignited in the coming days.
Middle East At Boiling Point:
Dozens of rockets were rampaged in Beit Hillel, a moshav in northern Israel on Saturday local time by Hezbollah, a response to Benjamin Netanyahu-led army's series of strikes in both Iran and Lebanon, which killed key political and military commanders.
Since October 7, the massacre of civilians in regions like Kibbutz, Nova festival and other southern places in Israel by Hamas militants, the Jewish-majority country has been on a mission to hunt down the key military and political figures that were related to the terrorist organization in Gaza.
Not just that, Israel has also been exchanging airstrikes in the northern region as well, with Iran, Syria and Hezbollah.
At the latest, situations in the Middle East have escalated after Hezbollah fired rockets into a football court of Golan Heights, which resulted in the demise of 12 Druze children. Israel reportedly retaliated with the assassination of Hamas leader Ismail Haniyeh in Tehran of Iran, followed by rocket attacks on Kfar Kela and Deir Siriane in Lebanon, and strikes in its capital city Beirut that killed Hezbollah's senior military commander Fuad Shukr,
Israel has not openly claimed these attacks.
Hezbollah responded with yet another barrage of rocket attacks on August 3rd, over the skies of Beit Hillel, however, Israel's renowned Iron Dome has intercepted the majority of the strikes.
Amidst high tensions, and concern of further challenging days, the US has increased its military presence in the conflicted Middle East in solidarity with Israel and to protect its personnel.
With the Middle East crisis only expected to intensify, gold and silver are likely to get a big boost in the coming days.
How Will the Middle East Crisis Impact Gold and Silver?
As per Choice Broking, escalating Middle Eastern hostilities, including the assassination of Hamas leaders, have increased the demand for gold as a haven. The death of the Hamas leader in Tehran, as well as threats of retaliation from Iran and its proxies, boosted gold's appeal as a geopolitical risk hedge.
On the weekly chart, the brokerage highlighted that gold price has formed inside Bar formation which signifies a potential positive reversal in the gold price from dips.
Meanwhile, on the daily chart, the brokerage mentioned that the gold price moved Broadening resistance would be at 70,965.
Another key driving factor is the sharp correction of the US dollar index aka DXY.
DXY has tumbled by 1% in the past week and closed on a negative note at 102.79 against a basket of currencies, while 10-year bond yields have dived by 40 basis points to close at 3.79% last week. As per Choice, these movements of DXY and bonds collectively suggest a positive bias for precious metals ahead.
In the coming week, Choice believes that the overall trend in gold prices is expected to be on a moderately bullish tone. Further, investors will closely keep a watch on key economic data in the US such as final services PMI, ISM Services PMI and unemployment claims which are scheduled later in the current week.
Hence, MCX gold's support level is seen at 68,370 and 67,811, while resistance is seen at 70,965 and 71,750.
Coming to silver, Choice Broking said, on the weekly chart, the silver price has formed a bullish spinning top formation. Here, the silver price has formed a Descending broadening wedge formation and the price has settled above the 200-DMA level which is placed at 81,214. Further, a breach of this support will accelerate the decline in silver price towards its next support placed at 79,361.
Also, Choice Broking's note said that RSI levels remained weak on all key timeframes, where it has trailed below 50 levels. Additionally, the brokerage observes a bearish crossover on MACD alongside the emergence of negative histograms on the weekly chart which collectively suggest negative biases in silver price.
Choice recommends traders look forward to key levels for further price action in silver. The MCX silver is seen to have support of 79,361 and 81,214 respectively, while resistance levels are between 84,700 and 86,167.
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