Gold Prices Surge Following White House Warning of Potential Iran-Israel Conflict
The surge in gold and silver prices despite USD strength, attributed to geopolitical tensions and central bank actions. Read on to know expert insights and forecasts.
Gold prices are on the rise for the fourth consecutive week, reaching new highs despite the strong US dollar and treasury yields. On Friday, the MCX gold rate exceeded ₹1,000 per 10 gm, hitting a fresh high of ₹73,461 per 10 gm. Similarly, silver prices also reached a new peak of ₹85,051 per kg on the MCX. Experts attribute the surge of gold rates over a potential Iran-Israel conflict, driving up demand for safe-haven assets like gold and silver.
According to a Reuters report on April 13, President Joe Biden of the United States anticipates that Iran's attack on Israel will occur "sooner rather than later," cautioning the Middle Eastern nation against it. Biden reaffirmed Washington's pledge to protect Israel and cautioned Iran that its efforts "will not be successful.” Impact of White House statement on gold rates can be observed in the market today.
Anuj Gupta, Head of Commodity & Currency at HDFC Securities, explained that the tension in the Middle East, particularly the possibility of conflict between Iran and Israel, has spurred demand for precious metals. Additionally, speculation about a potential rate cut by the US Federal Reserve and significant gold purchases by the Chinese central bank are contributing factors.
The market is witnessing a rise in gold prices despite the strengthening US dollar and rising treasury yields. This trend indicates robust safe-haven demand, according to Jim Wyckoff, Senior Analyst at Kitco Metals.
Chris Gaffney, President of World Markets at EverBank, noted that gold's resilience in the face of negative data suggests a positive trend in the market. The experts analysis also anticipates that while corrections may occur, the overall trajectory will remain upward.
Looking ahead, Gupta advised investors to adopt a "buy-on-dips" strategy until tensions in the Middle East ease. He suggested that if gold breaches the INR 73,500 per 10 gm level, prices could reach INR 75,000 per 10 gm in the near term. Similarly, if silver sustains above INR 85,000, it could climb to INR 91,000.
Gupta also forecasted that the Comex spot gold price could surpass $2,500 in the coming weeks, with support likely to hold above the $2,280 level. Meanwhile, Goldman Sachs raised its year-end gold price forecast to $2,700 per ounce from $2,300, citing the metal's resilience to typical macro factors. Investing in gold during geopolitical uncertainty is emphasized as experts provide optimistic outlooks for its future performance.
