Gold prices have regained momentum, surpassing the $2,350 mark early Monday after experiencing a corrective dip from its recent peak of $2,432 last Friday.
The surge in gold prices at the beginning of the week can be attributed to heightened tensions between Iran and Israel over the weekend. Investors sought refuge in the traditional safe haven asset amidst escalating hostilities, particularly following Iran’s drone attack on Israel late Saturday.
Concerns linger in the markets regarding the potential for further retaliation following Iran’s unprecedented strike. However, statements from key global players such as the UK, France, and Egypt condemning Iran’s actions, along with Saudi Arabia’s call for restraint, have provided some reassurance to investors. This has resulted in a more optimistic market sentiment, reflected in the 0.30% gain in S&P 500 futures, thereby limiting the upside potential for gold prices.
Looking ahead, the trajectory of gold prices hinges on the evolving situation in the Middle East. Any escalation in the conflict could fuel additional gains, potentially pushing prices towards the $2,400 mark. However, factors such as increased demand for the US Dollar due to safe-haven flows and hawkish expectations regarding the US Federal Reserve’s monetary policy stance may dampen the upward momentum of gold prices.
Market participants will also closely monitor the release of high-impact US Retail Sales data scheduled for later on Monday. Analysts anticipate a modest increase of 0.3% in the headline figure for March, compared to the 0.6% rise recorded in February. This data will provide further insights into the health of the US economy and its potential implications for gold prices.