Amid escalating geopolitical unrest in the Middle East, gold prices soared on Friday, driving investors towards safe-haven assets.
In Saudi Arabia, 24-carat gold saw a 0.15 percent decline to SAR287.19 per gram and SAR8,932.52 per ounce.
Globally, spot gold saw a 0.13 percent increase to $2,382.02 per ounce, as of 5:15 GMT, after reaching $2,417.59 earlier in the session, close to its all-time high of $2,431.29 it reached last Friday. Meanwhile, U.S. gold futures saw a 0.02 percent increase to $2,398.40. Gold prices have increased around 2 percent this week, marking 5 straight weeks of gains.
Geopolitical tensions escalate
Reports of rising geopolitical tensions in the Middle East have further exacerbated the climate of uncertainty. Analysts underscored the pivotal role of geopolitical tensions in driving gold prices, emphasizing that recent developments in the Middle East have been a primary driver of the precious metal’s rally. Investors now await more information on recent regional developments and the market’s response to them.
Market analysts referred to gold as a geopolitical trade rather than a monetary policy trade at the moment. Meanwhile, others emphasized the sustained support for gold prices, citing ongoing Chinese gold reserve accumulation as a significant catalyst.
Fed policy stance
Federal Reserve policymakers signaled a cautious approach to interest rate adjustments. With inflationary pressures sluggish and the U.S. economy maintaining resilience, policymakers hinted at maintaining borrowing costs at current levels well into the year. However, the prospect of higher interest rates looms, posing a potential headwind for gold prices as higher interest rates increase the opportunity cost of holding non-yielding assets like gold.
Read: Oil prices soar $3 per barrel amid concerns of supply disruptions
Precious metals landscape
While gold prices stole the spotlight, other precious metals also witnessed movement amidst the heightened geopolitical environment. Spot silver rose 0.2 percent to $28.28 per ounce, poised for a weekly gain. Spot platinum saw a 0.6 percent uptick to $938.39, while palladium held steady at $1,023.09, with both metals on track for weekly declines.
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