After widespread Israeli attacks on Iran, geopolitical tensions fueled demand for safe havens, driving gold prices up to a nearly two-month-high on Friday.
Israel launched extensive attacks against Iran. They targeted nuclear sites, missile factories and military leaders.
Israel’s claim that this action is the start of a long-term operation has reignited the conflict in the Middle East. It is aimed at preventing Tehran from developing atomic weapons.
Al Jazeera reported that Iran responded on Friday by sending a flock of drones toward Israel.
Gold prices continued to rise on Friday for the third day in a row, and reached their highest levels since April 22, during the European session’s first half.
Gold prices on COMEX reached $3,466.75 per ounce on Friday morning, their highest since April 22 when they had broken the $3500 barrier for the very first time.
Gold prices have risen sharply in the past two sessions due to a growing demand for safe havens.
Haresh Menghani is the editor of FXStreet. He said that a new escalation in geopolitical tensions within the Middle East would temper investors’ appetites for riskier investments.
The yellow metal is one of the traditional assets that are considered safe.
The European Central Bank also highlighted central banks’ significant role in the global gold market. They noted that the purchases of gold by these institutions accounted for around 20% of the total over the last three years.
Source: Commerzbank Research
Tensions escalate
The US president Donald Trump’s trade policy has already caused market uncertainty. Now, rising tensions have added another layer to the complexity of the bullion markets.
Geojit Investments believes that gold’s bullish trend is likely to continue as long as the demand for safe havens remains high.
Benjamin Netanyahu, Israel’s Prime Minister, announced the operation will continue until Iran’s nuke program is eliminated.
Israel declared an emergency in anticipation of possible retaliatory action from Iran as a result of the military operation.
Ayatollah Khamenei, Iran’s Supreme Leader, has vowed harsh punishment for the crime he called it, and stated that Israel sealed its bitter fate by this attack.
Menghani:
Investors are concerned about the possibility of an even more destructive war in the region.
UBS and Commerzbank expect higher gold prices
UBS reports that gold prices are relatively stable at $3,200 to $3,400 an ounce. This has been the case since April.
The stability of the market was maintained despite modest ETF withdrawals by investors and money managers.
Some notable deviations are temporary spikes over $3,500 in April and drops below $3.120 on May 15
UBS believes that the precious metal will retest $3,500 an ounce as the inflows return, says a report by Investing.com.
The company maintains its bullish position on the gold price, expecting renewed interest to be shown in the market during the next few months.
Gold is increasingly being viewed as an investment for the long term, rather than a geopolitical hedge.
Both institutional investors and retail investors are exhibiting a shift in their perspective.
UBS suggests a single-digit allocation for investors who prefer gold within an overall balanced portfolio.
Gold is a key part of the firm’s strategy for global asset allocation.
Barbara Lambrecht said, “On Friday, Commerzbank AG’s commodity analyst Barbara Lambrecht:
As a haven of safety, gold remains popular.
German banks now expect gold to average $3,400 per ounce at the end this year, and $3,600 by 2026.
The gold price will retest its all-time high
The market’s upward movement has been a constant over the past month.
Menghani stated that the short-term trend is up, and the oscillators are in bullish territory on the daily chart. This confirms a positive near-term outlook for gold.
It is therefore possible that a move to challenge the previous peak of $3,500, which was reached in April, could be made.
A downward correction can also present an opportunity to buy, as strong support is expected around $3,400.
Source: FXStreet
FXStreet predicts that if the selling continues below $3,385 the market will continue to fall, with losses aiming for the intermediate support of $3,355.
The channel’s lower limit is around $3,330-3,329, so this could be the beginning of a downward trend.
The post Gold Prices Reach Record High as Israel and Iran Strike Fuel Bullion Rally may be updated as new developments unfold.
