Gold Holds Above $5K as Geopolitics Drive Safe-Haven
Gold prices remain above $5,000 per ounce, driven by increased demand for safe-haven assets amidst the escalating geopolitical situation in the Middle East. The market is highlighting the US military buildup in the region and concerns about a potential attack on Iran.
In early trading, gold futures in New York rose 0.7% to $5,030.70 per troy ounce. This movement indicates that investors are still choosing gold as a safe haven amid heightened geopolitical risks.
However, the gold market remains volatile. Prices have corrected sharply from their January highs, and since then have tended to fluctuate rapidly—partly driven by high speculative activity.
Soojin Kim of MUFG believes that while volatility is high, gold's strengths remain. He believes that geopolitical risks and the tendency of some investors to reduce their reliance on traditional assets remain the reasons why gold remains strong at high levels.
Beyond geopolitics, the direction of US interest rates remains a major determinant of gold's movement. In general, gold tends to benefit when interest rate expectations fall, as it is non-yielding.
Therefore, market attention is now focused on the release of PCE (Personal Consumption Expenditures)—the Fed's favorite inflation indicator—scheduled for Friday. This data has the potential to alter expectations of the interest rate path, as well as determine whether gold will continue to strengthen or remain subdued.
5 key factors below
Gold held above $5,000 as safe-haven demand increased.
Key triggers: US military deployment in the Middle East and the risk of escalation related to Iran.
New York gold futures rose 0.7% to $5,030.70/oz.
MUFG: Volatility is high, but gold's underpinnings (geopolitics and a shift away from traditional assets) remain strong.
Next market focus: the PCE release, a key inflation indicator for predicting the direction of the Fed's interest rate.
Source: newsmaker.id
