KVB Market Analysis | 13 August: Gold Prices Surge Amid Middle East Tensions and Falling U.S. Bond Yields

Product: XAU/USD

Prediction: Increase

Fundamental Analysis:

As U.S. government bond yields fell, the price of gold in the North American market rose by more than 1% on Monday. Additionally, the ongoing tensions in the Middle East, with no signs of a ceasefire, have increased demand for gold as a safe investment. Before important U.S. inflation data is released this week, U.S. bond yields dropped on Monday, with the 10-year Treasury yield falling by 4 basis points to 3.902%. Western countries issued a joint statement on Monday, warning Iran and its allies not to carry out attacks that could further escalate tensions in the Middle East. The situation in the Middle East seems to be on the brink of collapse. Gold is considered a safe investment during geopolitical and economic uncertainty and tends to do well when interest rates are low.

Technical Analysis:

Gold prices continued to rise on Monday and are approaching the record high of $2,483. If U.S. inflation is lower than expected, gold might test this high level. The momentum is in favor of gold buyers, which is shown by the Relative Strength Index (RSI) being above the midpoint, indicating the potential for higher prices. The first resistance for gold buyers will be the record high of $2,483. If this level is surpassed, the next challenge will be breaking the $2,500 psychological barrier. If gold prices drop below $2,450, the next support level will be $2,400, followed by the 50-day Simple Moving Average (SMA) at $2,373.

Product: USD/JPY

Prediction: Decrease

Fundamental Analysis:

On Monday, the USD/JPY rose by 0.36% to 147.15. Former Bank of Japan board member Makoto Sakurai said that due to the market turmoil caused by the Bank of Japan's recent rate hike and the low likelihood of a rapid recovery in Japan's economy, the Bank of Japan will likely not raise interest rates again this year. His comments explain why the Bank of Japan is unlikely to rush into another rate hike, which has weakened the yen. However, with the U.S. election and possible Federal Reserve rate cuts ahead, volatility might increase by the end of the year, making it less likely for the market to return to carry trading.

Technical Analysis:

The USD/JPY is leaning downward despite a recent rise that pushed the pair above $148.00, reaching a six-day high of $148.22. The Relative Strength Index (RSI) is still showing a bearish trend, suggesting that sellers have the advantage. If the USD/JPY falls below the August 9 low of $146.27, it could continue to drop. The next support levels would be the August 8 low of $145.44 and the August 7 low of $144.28. On the other hand, if the pair strengthens, it could aim for the August 12 high of $148.00. If it gains more momentum, it might rise towards $149.77 and potentially test the 200-day moving average (DMA) at $151.46.

Product: BTC/USD

Prediction: Decrease

Fundamental Analysis:

Bitcoin has rebounded to the $59,500 level, even though tensions are rising over the possibility of Iran launching a major attack on Israel this week, which has led more money to flow into traditional safe-haven assets like the U.S. dollar and gold. However, California Congressman Ro Khanna revealed that President Biden's administration might introduce a major cryptocurrency regulation roadmap in the coming weeks. In addition to this positive signal of regulatory changes from the U.S. government, Bitcoin holders are also starting to take action. According to Bitcoin.com, the well-known U.S. mining company and Bitcoin whale, Marathon Digital Holdings (MARA), is launching a plan to issue $2.5 billion in convertible senior notes, due in 2031. This move is aimed at qualified institutional buyers and seeks to raise funds for corporate investments and the purchase of more Bitcoin.

Technical Analysis:

Bitcoin bears are trying to push the price down further, but bulls are buying as Bitcoin drops and are trying to keep the price above the psychological level of $60,000. The volatility of Bitcoin is making traders nervous. Over the weekend, Bitcoin fell below the moving average, showing that bears are not willing to give up easily. The $55,724 level is a key support to watch on the downside. If the price drops below this level, it suggests that market sentiment is still negative and traders are selling when the price rises. This could open the door for a drop to $49,000. On the other hand, if bulls push the price above the moving average, it indicates that buyers are stepping in when prices are low, and Bitcoin might start moving towards $70,000.

Product: US Oil

Prediction:Increase

Fundamental Analysis:

On Monday, U.S. WTI crude oil futures prices rose sharply. The possibility of escalating tensions in the Middle East boosted oil prices. The price of WTI crude oil for September delivery rose by $3.22, or 4.19%, to $80.06 per barrel, the highest closing price since July 19. Brent crude oil for October delivery increased by $2.64, or 3.3%, to $82.30 per barrel, the highest closing price since July 25. Whether the situation can avoid further escalation and whether geopolitical risk premiums will significantly impact oil prices will be crucial this week and next week. An escalation of tensions in the Middle East could pose a major threat to global oil supply. Traders are mainly concerned about the potential damage to oil infrastructure, which could significantly reduce oil supply and drive-up prices.

Technical Analysis:

The OPEC and IEA reports could spark a turnaround, along with potential price movements near the 200-day Simple Moving Average (SMA) around $77.69. On the upside, bulls have reclaimed the key level near $75.27, which now acts as support to move back towards the 200-day SMA at $77.69. Two other important moving averages are also close by: the 55-day SMA at $78.55 and the 100-day SMA at $79.84. The Relative Strength Index (RSI) has bounced back on the daily chart, indicating there is still room for prices to trend lower. On the downside, the first level to watch is $72.00.

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