Gold prices surged on Friday following President Trump’s decision to order an airstrike that killed a powerful Iranian military leader. The preemptive action put pressure on riskier assets as Tehran vowed to avenge the death of General Qassem Soleimani. The action is likely just the beginning of geopolitical tensions that will escalate in the region. Gold prices are likely to continue to experience upward momentum as volatility in the capital markets rises.
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Gold prices surged and tested the target resistance near the September highs at 1,535. The weekly charts on gold prices are poised to break out. Short term support is seen near the 10-day moving average at 1,507. The 10-day moving average recently crossed above the 50-day moving average which shows that a short term up trend is now in place. Weekly momentum is positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-week moving average minus the 26-week moving average) crosses above the MACD signal line (the 9-week moving average of the MACD line).
The daily RSI (relative strength index) is now printing a reading of 82, rising from 77 which reflects accelerating positive momentum. The RSI is above the overbought trigger level of 70, and also points to a potential future correction.
Tensions reverberated through the Middle East on Friday, with Tehran vowing to avenge the death of General Qassem Soleimani and its allies in Iraq pressing to expel US troops from the country. Iraqi Prime Minister Adel Abdul-Mahdi condemned the overnight strike, calling it a flagrant breach of the terms underwriting the presence of US forces in the country. The strike also killed Abu Mahdi al-Mohandes, the deputy head of the Popular Mobilization Forces, which is an umbrella for dozens of militias that are part of the Iraqi security apparatus but include factions that swear allegiance to Iran’s supreme leader.
This article was originally posted on FX Empire
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