Gold Hits $5,100 as US-Iran Tensions Drive Safe-Haven Demand
Gold prices rebounded to around $5,100 on Wednesday, supported by safe-haven demand as renewed geopolitical tensions between the US and Iran enhanced bullion’s allure, following its strongest performance in over 17 years just a day prior. Spot gold rose 2.9 per cent to $5,082.94 per ounce as of 0813, following a nearly 6 per cent surge on Tuesday, marking its largest daily gain since November 2008. Bullion reached an unprecedented peak of $5,594.82 last Thursday. US gold futures for April delivery increased by 3.4 percent, reaching $5,103.50 per ounce. The US military reported on Tuesday that it shot down an Iranian drone that “aggressively” approached the Abraham Lincoln aircraft carrier in the Arabian Sea.
Gold is rebounding from a low of $4,403.24 reached on Monday following its largest two-day sell-off in decades. “After such a sharp rally, a correction was expected; it was not surprising. With gold coming back up, the fundamentals have not changed much,” analyst Soni Kumari said, adding that the geopolitical and economic backdrop remained mostly unchanged. Goldman Sachs stated on Wednesday that it identified considerable upside risk to its $5,400 year-end forecast for gold, attributing this to central banks continuing their recent pace of accumulation and private investors increasing their gold ETF purchases.
“Going ahead … we are expecting the same $5,600 levels (for gold) by the end of the first half or April-end while prices will continue to rise thereafter and our year-end target is $6,000/oz,” said Jigar Trivedi. Spot silver increased by 6.1 per cent, reaching $90.34 an ounce. It reached a record high of $121.64 on Thursday but subsequently declined to a month-low of $71.33.On Monday, following a record single-session price wipe-out of 27 percent on Friday.
Markets are now looking forward to the ADP private payroll data for further insights into the Federal Reserve’s policy direction, even as a partial US government shutdown has postponed the highly anticipated employment report for January. Spot platinum increased by 5.6 percent to reach $2,334.25 per ounce, while palladium rose by 5.4 percent to $1,826.21.
