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Gold Nears Record High Following Iran's Attack on Israel

Gold prices approached record highs after Iran launched an unprecedented attack on Israel, sparking a rush for safe-haven assets amid increased geopolitical tensions.

The price of gold jumped by up to 1.2% as the situation in the Middle East worsened, although it later gave up some of those gains. The attack involved over 300 drones and missiles targeting Israel, but most were intercepted, and there were no casualties reported.

After initially breaking through $2,400 an ounce, gold's price retreated somewhat as traders took profits and technical indicators suggested the price rise was too rapid. However, the ongoing conflict has renewed investor interest in gold as a safe investment, with further potential increases if the situation escalates.

Chris Weston of Pepperstone Group Ltd. highlighted the significant geopolitical risks adding a premium to gold prices, suggesting a likely upward trend in the medium term. Gold has risen nearly 20% since mid-February, defying expectations.

Despite potential headwinds from anticipated U.S. Federal Reserve interest rate cuts—which generally dampen gold's appeal because it bears no interest—the metal has found substantial support. Factors such as strong purchases by central banks and robust demand from Chinese buyers, coupled with ongoing risks in the Middle East and Ukraine, have bolstered gold's status as a safe haven.

Wall Street banks have responded by raising their gold price forecasts, with Goldman Sachs now predicting a year-end price of $2,700 an ounce, anticipating that forthcoming Fed rate cuts will continue to support gold’s upward trajectory.

As of mid-morning in Singapore, spot gold was priced at $2,357.79 an ounce, continuing its rise after a 0.6% gain the previous week. The U.S. dollar index remained steady, and while other precious metals like silver saw gains, both platinum and palladium experienced declines.



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