Gold prices edged higher on Tuesday, maintaining proximity to the recent record high, as escalating geopolitical tensions in the Middle East spurred demand for the safe-haven metal. The surge in prices follows a volatile period where spot gold reached an all-time high of $2,431.29 last week, indicating a growing appetite for assets that are resistant to market uncertainties.
In Saudi Arabia, 24-carat gold climbed 1 percent to SAR287.57 per gram and SAR8,944.35 per ounce.
Globally, spot gold rose 0.17 percent to $2,387.42 per ounce, as of 5:14 GMT, after hitting an all-time high of $2,431.29 last week. Meanwhile, U.S. gold futures gained 0.87 percent to $2,403.65.
Factors driving gold’s rally
Analysts attribute this surge in gold prices to concerns stemming from the latest developments in the Middle East, coupled with ongoing factors such as central bank purchases and rising inflation expectations. Recently, gold has regained momentum as an inflationary hedge, with geopolitical tensions only adding to its appeal. Despite robust U.S. retail sales data in March, gold prices surged by 1.6 percent in the previous session. However, gold prices were gaining even before geopolitical tensions began in the Middle East due to central bank purchases and rising inflation expectations.
Investor sentiment appears to be increasingly bullish on gold. Citi projects prices to soar to $3,000 per ounce over the next 6-18 months. The bank cited a range of factors including strong physical consumption drivers in key markets like India and China. Moreover, the bank expects an increase in geopolitical hedging and sustained central bank buying.
Other precious metals
While gold prices took center stage, other precious metals experienced mixed fortunes. Spot silver fell marginally by 0.3 percent to $28.80 per ounce while platinum rose by 0.4 percent to $966.49. Meanwhile, palladium recorded a decline of 1 percent to $1,025.43.
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