Gold prices in Asian trading sessions maintained their proximity to record highs, driven by sustained safe-haven demand amidst escalating geopolitical tensions between Iran and Israel. However, a surge in the value of the dollar tempered larger gains in the precious metal, as mounting expectations of prolonged higher U.S. interest rates propelled Treasury yields upwards.
Despite the influence of the stronger dollar, gold continued its upward trajectory, with spot prices edging up by 0.1% to $2,385.35 per ounce, while gold futures expiring in June surged by 0.7% to reach a new record high of $2,401.50 per ounce by 00:17 ET (04:17 GMT). This ascent follows spot gold hitting a peak of $2,431.53 per ounce on Friday, shortly before Iran initiated a drone and missile attack on Israel.
The recent surge in gold prices has been primarily fueled by deteriorating geopolitical tensions in the Middle East, with Iran’s attack on Israel over the weekend serving as a catalyst. Speculation regarding Israel’s imminent response to the strike has intensified fears of a potential all-out conflict, which could draw in other regional powers, as well as the U.S. and its allies. In times of global turmoil, gold is sought after as a traditional safe haven due to its relative price stability.
Central bank buying over the past year, particularly in emerging markets, has further bolstered gold prices amidst concerns of a looming global economic downturn in 2024. As of now, spot gold has surged by 15.5% since the beginning of 2024.
Investors are now eagerly awaiting a speech from Federal Reserve Chair Jerome Powell later today for insights into potential interest rate adjustments this year. The speech follows the release of robust inflation and retail sales data, which led traders to largely discount expectations for an interest rate cut in June. This sentiment has somewhat dampened the upside potential for gold, as traders turned to the dollar as a hedge against the possibility of prolonged higher U.S. interest rates.
In contrast, other precious metals exhibited mixed performance on Tuesday. Platinum futures dipped by 0.3% to $981.30 per ounce, while silver futures saw a modest increase of 0.6% to $28.880 per ounce.
Meanwhile, copper prices retreated from 22-month highs as data from China, the top importer of the metal, presented a mixed picture. Three-month copper futures on the London Metal Exchange declined by 0.3% to $9,544.50 per ton, while one-month U.S. copper futures fell by 0.6% to $4.3515 per pound. Although China’s first-quarter GDP surpassed expectations, indicators such as industrial production and retail sales for March suggested a waning momentum. Nonetheless, the possibility of tighter copper markets, fueled by production cuts announced by several Chinese copper refiners, kept prices close to recent highs.
In the realm of other metals, aluminum prices retreated after reaching 22-month highs due to expectations of constrained supplies following stricter Western sanctions imposed on Russia.
