Gold surges as Iran’s death tolls of top officials rise

• Gold prices surge after Israel continues to strike Iran, with attacks on nuclear facilities in Tehran continuing.
• XAU/USD surges to $3,340 with a $3,500 record high in sight. Iran’s top official death toll climbs.
• Michigan Consumer Sentiment data and Inflation Expectations ahead. 

Gold (XAU/USD) is extending its gains as Israel’s attacks on Iran continue, supporting demand for the safe-haven precious metal.

Recent news indicates that the United States and Israel have warned that attacks are likely to persist, leading to a surge in gold prices, which are currently trading at $3,430.

In an interview with ABC News, US President Donald Trump stated, “I think it’s been excellent,” Trump said. “We gave them a chance and they didn’t take it. They got hit hard, very hard. They got hit about as hard as you’re going to get hit. And there’s more to come. A lot more.”

On the US economic calendar, market participants will also be looking out for the results from the University of Michigan Consumer Sentiment report and Inflation Expectations, scheduled for release on Friday.

Gold prices are highly sensitive to shifts in consumer sentiment, making this Friday’s consumer sentiment release a critical event to watch. As a leading indicator of economic confidence and inflation expectations, the index offers early insight into potential changes in US consumer behavior and pricing pressures.

Multiple nations, including Saudi Arabia and China, have condemned the attacks. Chinese foreign ministry spokesperson, Lin Jian, said that “China urges all relevant parties to do more to promote regional peace and stability and to avoid further escalation of the situation. China stands ready to play a constructive role in helping de-escalate the situation.”

These developments and increasing geopolitical risks increase the appeal of Gold, which could continue to underpin prices.

Daily digest market movers: Israel attacks, US Michigan Sentiment in focus

• In a post on social media, President Trump stated, “I gave  Iran chance after chance to make a deal. I told them, in the strongest of words, to ‘just do it,’ but no matter how hard they tried, no matter how close they got, they just couldn’t get it done,”. 
• These comments have raised questions over the involvement of the US in the attacks, which could cause geopolitical risks to intensify between the US and other nations that have condemned the attacks. 
• In a post on social media, President Trump stated, “I gave  Iran chance after chance to make a deal. I told them, in the strongest of words, to ‘just do it,’ but no matter how hard they tried, no matter how close they got, they just couldn’t get it done,”. 
• On Friday, Reuters and Bloomberg reported that Israel had struck multiple facilities in Iran. 
• Israeli Prime Minister Netanyahu confirmed the attacks, citing that Israel had “struck at the heart of Iran’s nuclear enrichment program”. Reports from Israel confirmed that roughly 100 targets had been hit using 200 air force planes.
• Several senior officials of Iran have been killed, including Hossein Salami, the head of the Islamic Revolutionary Guard Corps, and the military chief of staff, Mohammed Bagheri. 
• The escalation in tensions emerged on Thursday after the United Nations’ nuclear watchdog adopted a resolution stating that Iran is violating its obligations under the nuclear non-proliferation agreement. In response, Tehran announced plans to escalate its nuclear activities, asserting that it had “no option but to respond.” Uranium, the core fuel used in nuclear energy, can be weaponized when highly enriched. Iran continues to insist that its nuclear program is intended solely for peaceful purposes.
• Trump confirmed on Wednesday that US personnel are being moved out of parts of the Middle East due to the escalating tensions between Israel and Iran. This occurs ahead of the sixth round of nuclear talks between the US and Iran, scheduled for this weekend, which has since been cancelled.
• On the economic data front, the release of US Producer Price Index (PPI) data on Thursday showed that inflation is slowing on the wholesale level. Headline PPI showed an annual increase of 2.6% in May, in line with analyst forecasts, following a 2.5% increase in April. Core PPI, which excludes volatile goods, fell to 3% in May, down from 3.2% in April.
•  PPI data followed the release of the US Consumer Price Index (CPI) on Wednesday, which showed that inflation at the consumer level continued to ease in May.
• As for the University of Michigan release, traders will pay particular attention to the one-year and five-year inflation expectations included in the report, which are closely monitored by the Federal Reserve. 

Technical analysis: Gold prices climb to $3,340

Gold prices rallied on Friday after reports of the attacks, breaking above the former $3,400 psychological resistance level, which has now turned into support.

The safe-haven appeal of Gold lifted XAU/USD to its second-highest peak this year near $3,444, where the metal is currently trading. The next level of resistance remains at $3,500, the record high that was reached in April.

Meanwhile, support remains firm at $3,400, with a move lower bringing the $3,385 mark into play. The latter is another crucial level that has limited the upside move in Gold prices on several occasions throughout the week.

Gold (XAU/USD) daily chart

Meanwhile, the Relative Strength Index (RSI) stands at 62 and points upwards, indicating a bullish bias. On the downside, the $3,350 psychological level, which has provided support throughout the week, remains intact. Below that is $3,291, the 23.6% Fibonacci retracement of the January-April uptrend.

For bearish momentum to gain traction, a breach of this zone may pave the way for the next big psychological level of $3,200.