Gold (CM:XAUUSD) firmed up by nearly 0.6% to $2,356/OZ today as investors size up the latest developments in the Middle East.
Haven of Safety
The yellow metal is up by nearly 3% over the past week. During this period, Israel successfully fended off an unprecedented attack from Iran. While major world powers, including the U.S., are advocating restraint in the conflict, investors continue to pile up gold as a haven of safety.
While gold has already rallied by nearly 13.6% so far this year, Goldman Sachs (NYSE:GS) sees the precious metal’s price rallying further to as much as $2,700/OZ by the end of this year. Additionally, gold-buying by central banks continues to act as a major support for gold’s price rally.
Potential Challenges for Gold
In the coming days, the upswing in gold prices could be influenced by a strong U.S. Dollar and any hawkish comments from Fed officials. Furthermore, markets have largely tempered expectations of rapid rate cuts from the Fed, potentially limiting any further gains in gold prices. Additionally, any signs of conflict de-escalation in the Middle East could knock off the risk premium from commodity prices.
Is the Price of Gold Going to Increase?
For now, faint signs of measured de-escalation are evident in Iran’s quick announcement that it considers its retaliation to be over. However, the determining factor for gold prices could be the next actions taken by Israel and the West. Meanwhile, the TipRanks Technical Analysis tool continues to indicate positive momentum in gold with a Strong Buy signal.
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