Gold prices hit record high as geopolitical tensions flare
Upstox
2 min read • Updated: April 3, 2024, 7:04 PM
Summary
Gold prices hit a record high on Wednesday as rising geo-political tensions increased the safe haven allure of the yellow metal. The $2,300 per ounce mark is now acting as a strong resistance after spot gold hit $2,288 per ounce level.
Gold prices hit a record high on Wednesday as rising geo-political tensions increased the safe haven allure of the yellow metal. Spot gold touched a high of close to $2,288 per ounce earlier during the day and has since been trading close to the $2,270 per ounce mark. Meanwhile, spot gold touched a high of close to ₹69,400 per 10 grams on the MCX earlier during the day and has since been trading close to the ₹69,230 per 10 grams mark.
Rising geo-political tensions push gold prices to new high levels
The rise in gold prices follows two critical developments, one in the middle-east and the other concerning Russia and Ukraine. An Israeli airstrike on an Iranian consulate building in Syria’s capital city Damascus has reportedly left seven Revolutionary Guards and six Syrians dead. Tensions flared as Iran’s supreme leader Ayatollah Ali Khamenei vowed revenge saying that Israel would regret its crime.
On the other hand, Russia has increased its attacks on Ukraine’s energy infrastructure that left hundreds of thousands without power in the country.
US interest rates, a potential key trigger for gold prices
Another factor that is acting in favour of gold prices in current times is the U.S. Federal Reserve’s indication on potential rate cuts in the coming months. According to a recent report, Fed Chair Jerome Powell pointed out that the latest U.S. inflation data is along the lines of what the central bank would like to see.
If the rate cuts do happen this year, gold prices are expected to receive further boost since lower interest rates reduce the opportunity cost for investors to hold the metal that itself does not yield any interest.
Gold outperforming Indian equities in 2024
With gold hovering close to the $2,300 per ounce mark, investors and traders are now crucially eyeing the level that has so far acted as a strong resistance. Gold prices have been on a continuous up move this year. On a year-to-date basis, the metal has provided close to 10% returns as against just over 3% returns recorded by the Nifty 50 index and over 2% returns posted by the benchmark Sensex.