Gold could trade in a range of US$1,950-1,960 per ounce as war in the Middle East intensifies and hopes for diplomatic talks fade after a deadly explosion at a Gaza hospital, according to analysts.
Spot gold prices shot up by nearly 0.8% from $1,924 to a four-week high of $1,938 per ounce on Wednesday after the Gaza hospital bombing that left hundreds dead, causing Arab leaders to pull out of a planned meeting with US President Joe Biden during his trip to the region.
Wednesday marked the third consecutive day that gold traded above $1,915.
The threat of escalation in the conflict continues to provide support for bullion, which has gained about 6% since Hamas's surprise attack on Israel on Oct 7, said gold traders.
"We are projecting the price of gold could reach $1,950-1,960 per ounce as violence in the Hamas-Israel war escalates," said Chutikarn Santimetvirul, derivatives investment analyst at Phillip Securities (Thailand).
Gold climbed even as data showed US retail sales exceeded all forecasts and industrial production strengthened last month.
The figures reinforced the case for the Federal Reserve to keep interest rates higher for longer. Higher borrowing costs are typically negative for gold.
MTS Gold shared similar views, predicting gold prices having a resistance level of $1,955, with a support level of $1,920.
The domestic gold price is estimated at 33,500 baht per one baht weight for resistance, while the support level is 33,100 baht per baht weight, said MTS Gold.
YLG Bullion and Futures recommends investors pursue short-term speculative buying of gold once the price eases to below $1,920 per ounce, and cut losses when prices fall to around $1,920.
Oil prices also resumed rallies after the planned summit between President Biden and Arab leaders was cancelled following the hospital attack, with the possibility a wider conflict could endanger crude flows.
Oil prices surged nearly 2% on Wednesday, with West Texas Intermediate rising above $88 a barrel.