Gold prices continued to move in a positive zone and approached the record highs scaled last week above $2400 an ounce.

Prices are underpinned by mounting geopolitical tensions between Iran and Israel, driving demand on safe havens. 

Gold closed on a fresh record high on Monday, while active June futures settled at $2383. 

The City Bank group wrote a memo saying that gold’s recent surge is driven by geopolitical tensions, and coincides with record highs for the stock market as well. 

Haven demand rallied after Iran launched over 300 drones and missiles directly towards Israel, with most intercepted mid-air.

Israel’s military officials asserted that Israel is preparing for a response to the attack launched by Tehran last week, while European and US officials called for restraint. 

Analysts have warned that an Israeli response could lead to a wide-spread conflict, which will boost demand on gold prices and drive oil prices and the dollar higher. 

$3000 an ounce

The City Bank group expects gold prices to hit $3000 in the next six to 18 months. 

Gold is a favorite among investors in times of uncertainty and inflation, such as these times. 

Gold spot prices hit a record high at $2431.55 an ounce on Friday, April 12. 

Spot Prices

An usual phenomenon has now occurred, with US stock indices surging 15% this year at the same time that gold is hitting record highs as well.

Stocks are gaining ground amid high generosity from global central banks, which are starting to unwind their restrictive monetary policies. 

Recent scorching US inflation data for March hurt the odds of a Federal Reserve interest rate cut in June or July, with investors now expecting only two interest rate cuts this year in the US, instead of three.  

Higher interest rates mean higher treasury yields which usually sap demand from gold, however analysts remain optimistic on gold’s prospects for its haven status and strong actual demand. 

Goldman Sachs’ Outlook

On Friday, Goldman Sachs’ analysts said that the gold market is an “unshakable bullish market”, revising their price target for the yellow metal from $2300 to $2700 by the end of the year.  

Gold prices declined in European trade on Tuesday on profit-taking, after the precious metal touched a record high on Monday while investors shun off major positions in wait for the Israeli response to the latest Iranian attack.

Gold futures are pressured by higher US treasury yields as hot retail sales data hurt the odds of Fed interest rate cuts in June and July. 

Now investors await important developments today, including Fed Chair Jerome Powell’s speech on North America’s economic directions.

Prices 

Gold prices fell 0.8% to $2364 an ounce, with a session-high at $2392, after closing up 1.6% on Monday, marking a record high at $2383 on haven demand. 

The precious metal hit a record high at $2431 an ounce on strong demand from investment funds and central banks.

Israeli Response 

Israel’s military officials asserted that Israel is preparing for a response to the attack launched by Tehran last week, while European and US officials called for restraint. 

Markets are waiting closely for the next Israeli step, as western and Arab countries try to convince the Israeli government that opening a front with Iran will carry negative consequences for Israel.

US Yields 

US 10-year treasury yields rose 0.8% on Tuesday to near a five-month high at 4.663%, pressuring non-yielding assets. 

The developments came after US retail sales data in March, which were far above estimates, indicating strong growth in the first quarter. 

The data sowed doubts about the timing of the next Federal Reserve interest rate cut as the economy continues to prove resilient. 

US Rates

Following the retail sales data, the odds of a Fed interest rate cut in June fell to 23%, while the odds of such a cut in July slid to 48%. 

San Francisco Fed President Mary Dale said on Monday that there’s no urgent need to cut interest rates.

Powell 

Federal Reserve Chair Jerome Powell is scheduled to participate in a fireside chat about economic trends in North America at the Wilson Center’s Washington Forum, in Washington DC, later today. 

The SPDR

Gold holdings at the SPDR Gold Trust rose 1.73 tonnes yesterday to a total of 828.45 tonnes, the highest since April 4. 

Cryptocurrencies were mixed on Monday amid a slight rise in risk appetite with markets awaiting more data or events that could direct investments.

The markets are keeping a close eye on US corporate earnings results, which usually start with banks, but most focus is on the tech sector. 

Otherwise, earlier government data showed retail sales rose 0.7% in March m/m, beating estimates of 0.3%, and showcasing the strength of the economy. 

Ethereum 

Ethereum rose 0.5% as of 20:20 GMT on CoinMarketCap to $3086.  

Rebel

Rebel rose 1.5% on CoinMarketCap to $0.497. 

US stock indices rose on Monday following strong retail sales data and earnings results by Goldman Sachs. 

The markets are keeping a close eye on corporate earnings results, which usually start with banks, but most focus is on the tech sector. 

Otherwise, earlier government data showed retail sales rose 0.7% in March m/m, beating estimates of 0.3%, and showcasing the strength of the economy. 

On trading, Dow Jones rose 0.5%, or 170 points to 38,154 as of 16:04 GMT, while S&P 500 rose 0.4%, or 18 points to 5141, as NASDAQ climbed 0.2%, or 23 points to 16,198.