(Kitco News) – Gold prices are once again testing the top end of their recent range as escalating geopolitical tensions grip financial global markets, according to analysts.
Gold is solidly higher Wednesday morning as markets digest the most recent comments from U.S. President Donald Trump, who in a Twitter comment warned of imminent military action in Syria. June gold futures last traded at $1,356.60 an ounce, just off a two-week high and up 0.80% on the day.
Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and “smart!” You shouldn’t be partners with a Gas Killing Animal who kills his people and enjoys it!
— Donald J. Trump (@realDonaldTrump)
“If the situation in the Middle East further deteriorates, gold is likely to remain in strong demand,” said commodity analysts at Commerzbank.
George Gero, managing director with RBC Wealth Management said that he could also see gold prices moving higher in the near-term as the yellow metal is a “political and economic barometer.”
Bill Baruch, president of Blue Line futures, described the geopolitical tension as a wild card for the gold market as prices remain in a well-established trading range.
He added that gold needs to get above $1,370 an ounce if it is going to break out of its current range.
Jim Wyckoff, senior technical analyst at Kitco.com, said that ultimate resistance comes in at the January high of $1,375 and a move above that level is needed to trigger a breakout.
Along with higher gold prices, the risk-off sentiment can also be seen in equity markets. Colin Cieszynski, chief market strategist at SIA Wealth Management, said that equity futues are down nearly 1% across the board ahead of the North American open.
Trump’s escalating rhetoric on Syria and President Bashar Assad came after reports of a poison gas assault on the rebel-held town of Douma during the weekend. The World Health Organization said on Wednesday that 43 people had died in the attack. The gas attack came nearly one year after the U.S. launched missiles at a Syrian airport in response to a previous gas attack.
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