Gold Hovers Near Record High Amid Escalating Geopolitical Concerns

Gold prices edged lower during trading today, Tuesday, although it is still trading near the record high it hit last week, as concerns over escalating geopolitical tensions in the Middle East boosted demand for the safe-haven metal.

Gold and the Dollar Now

Gold futures are now down 0.1% to $2382 an ounce. Spot gold is down about 0.75% to $2365 an ounce. After hitting a record high of $2431.29 on Friday. On the other hand, the dollar index is up 0.11% to 106.110 points.

Other Metals

Spot silver fell 0.7% to $28.69 an ounce, platinum rose 0.7% to $969.05, and palladium lost 0.8% to $1027.50.

Reason for the Rise Now, Escalation of the War

The acceleration of gold’s rise came as a result of Israel’s announcement that it has prepared its response to the Iranian attack. This announcement came despite Iran’s announcement that its strike on Israel and its drone airstrike is over and that it does not intend to continue the strike against Israel.

The Israeli War Cabinet has decided to respond “clearly and strongly” to the missile and drone attack carried out by Iran on Saturday, according to the Israeli newspaper “The Times of Israel” on Monday, quoting the local channel 12.

The report said that Defense Minister Yoav Galant and Israeli Chief of Staff Herzi Halevi believe that Israel must take action in response to the attack, but without harming the US-led alliance that played a crucial role in helping Israel defend itself against the Iranian attack.

Israel intends to convey the message that it “will not allow an attack of this magnitude to go unanswered.” The media added that the response will be coordinated with the United States. Iran has said through official sources that in the event of any Israeli attack, its response will be immediate.

Global Banks Adjust Their Gold Outlook Expecting Prices to Reach These Levels

Analysts at ANZ’s research unit said in a note that silver is likely to outperform gold as investment flows increase amid record gold prices.

Analysts also expect gold to trade near $2500 an ounce and silver to move above $31 an ounce by the end of 2024. Gold rose above $2400 in the previous session and has gained more than 14% so far this year, supported by strong buying from central banks and safe-haven flows amid ongoing geopolitical risks.

On the other hand, US investment bank Goldman Sachs (NYSE:GS) raised its gold price forecast for the end of this year, especially after geopolitical tensions escalated in the Middle East.

Goldman Sachs raised its gold price forecast from $2300 to $2700 an ounce by the end of 2024, and the US bank explained that the recent rise in gold prices is unrelated to the usual macroeconomic factors associated with the gold metal.

The US investment bank added that the continued demand from central banks, including the People’s Bank of China, is driving up global gold prices, noting that demand for gold as a safe haven is expected to rise based on potential Federal Reserve rate cuts, in addition to the results of the US elections.

Oil Rises as Israel Considers Response to Iranian Attack

Oil prices rose on Tuesday amid rising tensions in the Middle East after the Israeli military chief said Israel would respond to Iran’s missile and drone attack earlier this week, amid calls for restraint from allies.

Oil prices ended Monday’s session down after it appeared that Iran’s weekend attack on Israel was less damaging than initially thought, which initially eased fears of a rapidly escalating conflict that could disrupt crude oil supplies.

The attack, which Iran described as a response to an airstrike on its consulate in Damascus, caused only minor damage, as Israel’s Iron Dome defense system intercepted the missiles. But a government source said Israeli Prime Minister Benjamin Netanyahu convened his war cabinet for the second time in less than 24 hours on Monday to discuss how to respond to Iran’s first direct attack on Israel. This raised market concerns that retaliatory measures could affect oil supplies.

Iran produces more than three million barrels a day of crude oil and is a major producer in the Organization of the Petroleum Exporting Countries (OPEC). Both benchmark crudes rose on Friday in anticipation of Iran’s retaliatory attack, with prices rising to their highest levels since October.

In China, the world’s largest oil importer, official gross domestic product (GDP) figures due out on Tuesday are expected to show growth slowing to 4.6% year-on-year from 5. This will continue to put pressure on policymakers to unveil more economic stimulus measures that could boost oil prices.

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Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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