Gold Prices Surge Past $2,400 on Rising Geopolitical Tensions
Gold prices soared past $2,400 an ounce as concerns over escalating tensions between Israel and Iran fueled demand for safe-haven assets. The precious metal rose by as much as 1.3% and was on track for its fifth consecutive weekly gain, driven by unverified reports of explosions in Iran, Syria, and Iraq.
Intensifying Rhetoric and Geopolitical Risks
The verbal sparring between Iran and Israel has intensified following a recent drone and missile strike, with Iran issuing warnings against attacks on its nuclear facilities and threatening retaliation if targeted. The United States has called for restraint in the midst of these escalating tensions.
Amidst these geopolitical risks, concerns were slightly muted by Thursday’s jobs data, which hinted at a stronger economy and raised doubts about the Federal Reserve’s inclination to cut interest rates in the near future. Higher interest rates are typically seen as negative for gold, which does not provide any yield.
Global Central Bank Demand and Chinese Consumers
In addition to geopolitical tensions, robust demand from global central banks and Chinese consumers has further supported the upward trajectory of gold prices. Data revealed a 31% increase in Swiss exports to China in March, indicating strong appetite for the precious metal in the world’s second-largest economy.
At 9:36 a.m. in Singapore, spot gold was up 1.1% at $2,404.95 an ounce, while the Bloomberg Dollar Spot Index also saw a 0.2% increase. Silver, palladium, and platinum prices also witnessed gains alongside gold.
Insight:
Given the continued uncertainty surrounding global geopolitical tensions and the Federal Reserve’s monetary policy, gold is likely to remain a popular choice for investors seeking a safe-haven asset. The ongoing demand from central banks and strong interest from Chinese consumers further underscore the bullish sentiment towards the precious metal.
–With assistance from Martin Ritchie.
©2024 Bloomberg L.P.
