Israel-Hamas-Iran War: Gold Prices Up Rs 4,750 In 2 Weeks, Near-Term Target Rs 75,300; Yays And Nays For Rally

Gold prices in India are at their peak level with 24-carat breaching over the Rs 74,000 mark in 10 grams. In a little over two weeks of April month, prices of 24-carat gold have skyrocketed by a whopping Rs 4,750. The big bullish push to haven assets like gold is from geopolitical tensions in the Middle East, the major oil hub.

Gold Prices:

On April 17, 10 grams of gold in 24-carat is at an all-time high of Rs 74,130, while 22-carat is at Rs 67,950, and 18-carat is at Rs 55,590 in 18-carat. Today, Indians are celebrating Ram Navami as the birthday of the deity Rama. The demand for gold is high!

At the start of April, gold prices were at Rs 69,380 in 24-carat and Rs 63,600 in 22-carat of 10 grams each. Since then, the 24-carat is up by Rs 4,750 or 6.85% so far, and the 22-carat is up by Rs 4,350 or 6.8% as of April 17.

Why Gold Prices Are Rising?

Middle East region has continued to be a war zone since Israel declared war against Hamas, the governing body of the Gaza Strip. Hamas which is supposedly a proxy of Iran along with Hezbollah and Houthis have been in an intense riff-off. And the matter only escalated with the proxies' supposed leader, Iran joining the row.

With back-to-back warplanes or drone attacks in vital regions of Syria, and Lebanon, taking out Iran's key militants of Quds Force and other members of the Iranian Revolutionary Guard Corps (IRCG), Iran's chief leader Ayatollah Ruhollah Khomeini declared that Israel must be punished.

Accordingly, earlier this week, Ayatollah-led Iran and its proxies launched airstrikes with over 300 ballistic missiles, of which, 99% were intercepted by Israel and its allies. The damage was minimal in Israel, and now the world is waiting for it to react.

Markets are bubbling in volatility on expectations of Israel's retaliation and further development of its war in Gaza with Hamas. To investment option like gold, geopolitical conflict is an opportunity for hedging returns going ahead.

MCX gold with June expiry is at Rs 73,069, broadly flat on April 16. Trading is closed on April 17 due to the festival.

Gold Prices Target:

In its technical report, Prabhudas Lilladher said, "The precious metal has been skyrocketing in the last one and a half months from 62200 zone to touch 72800 levels gaining almost 17% in a very short span of time."

Prabhudas' note added, "Currently with the geo-political tensions looming around, the yellow metal is anticipated to gain further in the coming days with near-term targets of 73200 and 75300 levels. The near-term support would be maintained near 70200 zone as of now."

Also, Yes Securities said, "The recent rally in gold was mainly supported by the risk aversion (geopolitical tensions) and market pricing in an early rate cut by the Fed."

Yes Securities highlighted the factors that could drive gold rally or hamper it. They are:

Yays For Gold Rally:

- Persistent theme of geo-political tension and geo-fragmentation

- Policy uncertainty with 60 countries going into elections (~49% of the global population) in 2024

- Risk aversion in case of global hard landing (low probability)

- Upside surprises in inflation could also support

NAYS For Gold Rally:

- Signs of easing geo-political tensions (low probability)

- Strong incoming data from the US to limit the possibility of an early rate cut (but geopolitics is likely to suppress this)

- The rising probability of a soft landing by the global economy

In the near term, Yes Securities expects gold to consolidate ~USD 2450 - USD 2500/oz as the rally has run strong in a very short time. The brokerage has also not ruled out 2,600 dollar ounces.