Gold edges higher, reclaiming $3,300, on rising geopolitical tensions and US fiscal woes

• Gold price rallies on the back of headlines that Israel considers striking Iran nuclear facilities. 

• President Trump clashes with Republican members on getting his fiscal package plan through US Congress. 

• Technically, Gold has broken out of its tight range after popping above $3,300.

Gold (XAU/USD) breaks higher on Wednesday towards $3,308 at the time of writing, fueled by concerns that tensions in the Middle East might spiral out of control again and US fiscal woes. In late trading on Tuesday, CNN reported that Israel is considering targeting nuclear sites in Iran. While former United States (US) President Joe Biden was able to change Israel’s Prime Minister Benjamin Netanyahu’s mind, US President Donald Trump has seen his diplomatic efforts fall apart, with markets mulling whether Trump is still able to control Netanyahu. 

In the US, President Trump is facing setbacks at home as well as the administration struggles to get enough support to pass through Congress its tax bil. Frustration arose for Trump at Capitol Hill when speaking with lawmakers who demanded to significantly boost the cap on the state and local tax (SALT) deduction.

Daily digest market movers: Awaiting confirmation from Trump or Netanyahu

• Safe-haven support for Gold was boosted by a CNN report that indicated Israel may be planning a strike on Iranian nuclear facilities. It remains unclear whether a final decision to carry out the attack was made, the report said. Markets will want to look for confirmation from either US or Israel’s leaders. 

• On the back of the phone call between US President Trump and Russian President Vladimir Putin, the Vatican has proposed to host any event related to Ukraine-Russia peace talks. 

• The Financial Times reports that US lawmakers are pressing Northern Ireland to approve an American-owned Gold mine potentially worth billions of pounds to the local economy, warning that delays to the project risk driving away foreign capital.

Gold Price Technical Analysis: Losing grip

Recent headlines about the Middle East and the deadlock in the US Congress are another hit for President Trump and his credibility, and to a broader extent, the credibility of the US Dollar and the US economy. Gold benefits from uncertainty,  and it could peak back above $3,350 should Israel confirm its plans. 

On the upside, the R1 resistance at $3,324 is the first level to look out for as it aligns with the high of May 12. The R2 resistance at $3,354 follows not far behind the R1 and could open the door for a return to $3,431, which were the peaks of April 21 and May 6 and 7. 

Some thick-layered support emerges on the downside in case Gold price declines. On the downside, the daily pivot comes in at $3,263. Next, there is a technical pivotal level at $3,245, and, just below, $3,231 as the intraday S1. 

XAU/USD: Daily Chart