Gold Prices See New High On Iran-Israel Tension

Gold prices have touched a new record high, as tensions between Iran and Israel intensify, leading to more safe haven asset purchasing.

Gold is a particular favorite inflation hedge in which people invest.

Euronews writer Indrahati Lahari reported that the price of the metal hit a new record at $2,338.7 (€2,179.6) per ounce on Thursday ( April 11, 2024) fuelled by increasing tensions in the Middle East.

This is primarily due to the increased possibility of drone or missile strikes by Iran or any of its proxy groups on government and military infrastructure targets in Israel, according to the US and its allies.

If so, this would be a major escalation of the current conflict in the Middle East, started by the Israel-Hamas war. Israel suspects Iran of backing Hamas, as well as the Yemeni Houthi rebels who have been attacking commercial vessels in the Red Sea.

Due to these rising geopolitical worries, investors have fled even more towards gold and other safe-haven assets.

Higher inflation and the cost of living in several parts of the world have also eroded the value of money, thus leading people to invest in inflation hedges, of which gold is a particular favorite.

Fundamentals impacting the price of gold

Market analyst and Euronews contributor, Piero Cingari, said: “Despite concerns over recent higher-than-expected inflation figures, the Federal Reserve remained committed to its projection of three 25-basis-point cuts this year.

“Fed Chair Jerome Powell delivered recent dovish remarks which reinforced market expectations of a rate cut as early as June, already factored in with an 80% likelihood.

“In Europe, the Bank of England witnessed a lack of hawkish sentiment within its board, as no members voted for a hike in its March meeting, contrasting with previous meetings". 

The BoE Governor Andrew Bailey acknowledged the market’s predictions of rate cuts this year as being "right."

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