Gold prices remained near record highs in Asian trading, driven by ongoing concerns over escalating geopolitical tensions between Iran and Israel. Safe-haven demand for the precious metal persisted, although gains were tempered by a spike in the US dollar, driven by expectations of sustained higher interest rates.
Spot gold edged up 0.1% to $2,385.35 an ounce, while gold futures expiring in June climbed 0.7% to a record high of $2,401.50 an ounce. These gains followed a surge that saw spot gold reach a record high of $2,431.53 an ounce on Friday, just before Iran’s drone and missile strike on Israel heightened tensions.
The recent increase in geopolitical tensions in the Middle East, fueled by the attack on Israel, has bolstered demand for gold as a traditional safe haven. Concerns that the conflict could escalate and involve other regional and global powers have contributed to the metal’s appeal as a hedge against uncertainty.
Gold’s rally has also been supported by central bank buying, particularly in emerging markets, amid fears of a potential global economic downturn in 2024. Year-to-date, spot gold has risen by 15.5%.
Market focus now turns to a speech by Federal Reserve Chair Jerome Powell later on Tuesday for insights into the possibility of interest rate cuts this year. Strong inflation and retail sales data have led traders to scale back expectations for a rate cut in June, which has limited gold’s upside as traders seek refuge in the dollar against the backdrop of potentially prolonged higher US interest rates.
In the broader metals market, platinum futures declined by 0.3% to $981.30 an ounce, while silver futures rose by 0.6% to $28.880 an ounce.
Meanwhile, copper prices retreated from 22-month highs on Tuesday, influenced by mixed economic data from China. Despite better-than-expected GDP growth in the first quarter, signs of weakening momentum in industrial production and retail sales weighed on sentiment. However, expectations of tighter copper markets, driven by production cuts by Chinese refiners, continue to support prices near multi-month highs.
Similarly, aluminum prices cooled off after reaching 22-month highs due to concerns over supply shortages following stricter Western sanctions on Russia.
