Central bank buying and geopolitical tensions propel gold to near-record highs
Gold prices continued their upward trajectory on Tuesday, staying close to the recent record high, driven by escalating geopolitical tensions in the Middle East. This surge in prices comes after a period of volatility where spot gold reached an all-time high of $2,431.29 last week, signaling a growing demand for safe-haven assets in times of market uncertainty.
Gold prices in the UAE
In the UAE, 24-carat gold was priced at AED288.75 per gram, with 22-carat gold at AED267.50, 21-carat gold at AED259, and 18-carat gold at AED222.
Global market performance
On a global scale, spot gold rose by 0.17 percent to $2,387.42 per ounce at 5:14 GMT, following its all-time high last week. Additionally, U.S. gold futures saw a gain of 0.87 percent, reaching $2,403.65.
Factors contributing to gold’s rally
Analysts attribute the recent surge in gold prices to a combination of factors, including concerns arising from geopolitical tensions in the Middle East, central bank purchases, and rising inflation expectations. Gold has also regained its status as an inflationary hedge, further increasing its appeal to investors. Despite positive U.S. retail sales data in March, gold prices have continued to climb, indicating a strong market sentiment. Central bank purchases and inflation expectations were driving gold prices even before the geopolitical tensions in the Middle East emerged.
Additional Insight: The anticipation of ongoing central bank purchases, coupled with rising inflation expectations, continues to support gold prices as investors seek safe-haven assets amidst global uncertainties. The geopolitical tensions in the Middle East have only added to the momentum, creating a favorable environment for gold’s upward trajectory.
Projections and outlook
Citi projects gold prices to reach $3,000 per ounce in the next 6-18 months, citing factors such as strong physical consumption drivers in key markets like India and China, in addition to increased geopolitical hedging and sustained central bank buying. This bullish outlook indicates a positive trend for gold investors in the foreseeable future.
Performance of other precious metals
While gold remains a focal point, the performance of other precious metals varied. Spot silver saw a slight decline of 0.3 percent to $28.80 per ounce, whereas platinum rose by 0.4 percent to $966.49. Palladium experienced a decline of 1 percent, falling to $1,025.43.
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