Gold prices rose to near record highs after Iran's unprecedented attack on Israel over the weekend, boosting demand for safe-haven assets.
Gold prices rose as much as 1.2% as the Middle East conflict entered a dangerous new phase, before gains were cut by about half. The Islamic Republic has launched more than 300 drones and missiles at Israel, though most have been intercepted and no fatalities have been reported.
The precious metal broke above $2,400 an ounce on Friday, but ended the session lower as technical indicators suggested its rally was too strong and investors liquidated their positions. Recent developments in the Middle East have redirected investors’ attention to safe havens, with fears of possible Israeli retaliation likely to support gold in the near term.
The rising tensions in the Middle East are a reason in themselves to buy gold, said Chris Weston, head of research at Pepperstone Group. “There’s a big geopolitical premium being priced into the moves,” he said, adding that the medium-term trajectory is likely to be higher.
Gold has risen nearly 20% since mid-February in a rally that has surprised many investors. The Federal Reserve’s approach to its long-awaited target, aggressive buying by central banks and increased demand from Chinese consumers have been the main drivers, along with rising geopolitical risks in the Middle East and Ukraine.
Spot gold rose 0.4% to $2,354.62 an ounce as of 8:51 a.m. in Singapore, after rising 0.6% last week. The Bloomberg Dollar Spot Index was flat, after gaining 1.3% last week, the most since September 2022. Silver rose, while platinum and palladium fell.
