The week ahead for gold may be an exciting one. Although the yellow metal is lower on Monday to begin the new trading week, numerous potential issues could drive the metal higher, and do so in a hurry. Following the recent run higher that gold has already seen, some pullback and consolidation are not only to be expected but are also healthy for the market. The geopolitical uncertainty being seen all over the globe right now has put gold into a short squeeze, as hedge funds and large market participants exit short positions with some even deciding to get long once again.

The gold market is just below the key $2,000 level. Trading at $1,997 in early afternoon action Monday, the yellow metal may need to retake the $2,000 level in the next day or two or risk vulnerability to more downside pressure. A solid close above this level may set the stage for a bullish rally, as more momentum players may view it as a sign of strength and look to avoid missing the bandwagon. Whatever the case may be, the $2,000 area is of critical importance to the market and will need to be dealt with sooner rather than later.

The ongoing war in Israel between Israel and Hamas may keep the market inundated with flight to safety buying interest. Just a few weeks old at this point, the war has already claimed thousands of lives and could enter a phase of increasing death and violence. The ground invasion of Gaza is of critical importance, as this area is home to many civilians and non-combatants. These people have had their internet and power cut already, and could soon run out of other key supplies needed for survival. In addition to the war in Israel, the war between Russia and Ukraine also rages on. This conflict is looking more and more like it could eventually turn into a nuclear conflict. How this could affect the U.S. and other nations is unknown, but the threat of nuclear arms being used may also keep buyers looking to gold for its perceived safety.

The price of gold hit a three-month high on Friday. The bulls have retaken control of the metal on the daily chart, on which a fresh four-week-old uptrend now exists. To keep this recent bullish momentum going, however, the bulls will need to take out the $2,000 level in a convincing fashion. A solid close above this area or several consecutive closes above it will be needed to attract fresh buyers into the market. If the bulls fail to do so and this level holds as resistance, the bears may find themselves able to turn the market lower again. The next several sessions may be very telling, therefore, as they could decide gold’s fortunes for the next several weeks or months.

The gold market is sharply higher on Wednesday as demand for safety takes center stage. The war in Gaza has taken a nasty turn for the worse. It was reported that an Israeli bomb hit a hospital in Gaza, killing 500 people. Hamas has blamed an Israeli air strike for the tragedy while Israeli has suggested that an errant Hamas missile is to blame. Whatever the case may be, the war appears to be getting nastier at this point and more violence may be seen before any type of conclusion is seen.

Of particular concern to global financial markets is the potential for additional actors to get involved in the conflict. The United States has already placed significant firepower within the region, including its newest supercarrier battle group. If the U.S. were to get involved, other nations such as Iran may also see fit to get into the mix, and World War III could be underway. The conflict has fortunately not reached that point, at least not yet, but the longer the battle rages on the more likely U.S. involvement may become.

The war in Israel is not the only war going on. The war in Ukraine continues to rage on as well, and there have thus far been no signs of a slowdown in that conflict. As long as battles are taking place anywhere on the globe, safe-haven demand for gold could rise and rise substantially. The wars taking place are already having a large impact on the price of gold, which has risen significantly in recent days and is sharply higher today. The gains seen in recent sessions could be magnified if the situations escalate further and could provide the bulls with the needed catalyst to produce a close and sustainable rally over the $2,000 level.

War is not the only issue affecting gold. The persistent inflation and higher interest rates are also important factor for the metals markets. Although the Fed may not continue to take rates even higher, it has suggested that rates would remain higher for longer. The Fed is unlikely, at this point, to signal a rate reversal until signs emerge of an impending recession. Those signs have remained elusive thus far, however, and the Fed may now find itself in a good spot to maintain higher rate levels to try to cool inflation. Price pressures have come down, without a doubt, but they remain stubbornly elevated and far from the Fed’s desired target of 2% annualized.

The gold bears are still in control on the daily chart, but not by much. The four-month-old downtrend on the daily chart is about to be negated, and any further upside will reverse that trend to up rather than down. The bulls are eyeing a close above the $2,000 as an indication of further strength. The bears are looking to produce a close below the $1,800 level, which seems a long way off at this point. The bulls are now within a day or two of striking and testing the $2,000 level, and such a test could determine the market’s direction for the months ahead.