An employee handles one-kilogram gold bars at YLG Bullion International Co. headquarters in Bangkok, Thailand, Friday, Dec. 22, 2023.
Chalinee Thirasupa | Bloomberg | Getty Images
Gold prices have continued to hover near record highs even after tensions erupted in the Middle East, increasing the attractiveness of bullion as a safe haven.
Gold prices notched another record close on Monday, with the most active June contract for gold futures trading up 0.37% to settle at $2,383 an ounce, and some say there it’s more room to run.
“Gold’s recent rally has been aided by geopolitical heat and is coinciding with record levels in stock indexes,” Citi wrote in a note dated April 15.
Demand for the safe-haven asset has grown amid rising tensions in the Middle East after Iran launched over 300 drones and missiles directly at Israel, most of which were intercepted, thanks to Israel’s Iron Dome air defense system .
Market watchers are closely monitoring potential retaliation from the Jewish state, which has vowed to “exact a price” from Iran.
Significant retaliation could lead to a broader conflict, which would subsequently trigger new gold purchases, as well as higher oil prices and a strengthening U.S. dollar, said Bartosz Sawicki, market analyst at financial services fintech firm Conotoxia .
We expect $3,000 per ounce of gold in the next 6-18 million.
Gold prices since the beginning of the year
Despite this, analysts remain optimistic about the yellow metal’s prospects, supported by continued physical demand and its attractiveness as a geopolitical hedge.
“We expect $3,000 an ounce of gold for the next $6 million to $18 million,” said Citi analysts led by Aakash Doshi, Citi’s head of commodities research for North America. The “floor price” of financial gold also rose from around $1,000 to $2,000 an ounce, Citi said.
On Friday, Goldman Sachs called the gold market an “unwavering bull market” and revised up its price target for the yellow metal from $2,300 an ounce to $2,700 by the end of the year.
— CNBC’s Gina Francolla contributed to this report.