Gold prices regained momentum early Monday, climbing back above the $2,350 mark following a recent correction from record highs reached last week.
The positive start to the week for gold was driven by escalating tensions between Iran and Israel, which spurred investors to seek refuge in the traditional safe haven asset. Iran’s drone attack on Israel over the weekend fueled fears of further conflict, underpinning gold prices as traders braced for potential retaliatory actions.
While concerns lingered over the repercussions of Iran’s strike, some relief emerged from international reactions. The condemnation of Iran’s actions by the UK, France, and Egypt, along with calls for restraint from Saudi Arabia, provided a degree of comfort to markets. This sentiment shift, coupled with a 0.30% gain in S&P 500 futures, reflected early optimism in the market, tempering the upside potential for gold prices.
Looking ahead, the trajectory of gold prices will likely be influenced by the evolving situation in the Middle East. A further escalation of the conflict could propel gold towards the $2,400 level. However, the resurgence in demand for the US dollar, driven by safe-haven flows and hawkish expectations regarding the US Federal Reserve’s monetary policy, could pose a challenge to the upward momentum of gold prices.
Additionally, market participants will closely monitor the release of high-impact US Retail Sales data later on Monday. Expectations suggest a slower increase in the monthly headline figure for March compared to February, which could further impact market sentiment and influence gold prices in the near term.
