(MENAFN) Gold prices surged on Wednesday, edging closer to record levels, as escalating geopolitical tensions in the Middle East drove investors towards the safe haven asset. The increasing risk of conflict expansion in the region prompted a flight to safety, with gold emerging as a preferred choice for investors seeking refuge from market uncertainty. Additionally, short-term declines in the value of the dollar and US Treasury bond yields further bolstered gold prices, reinforcing its appeal as a store of value.
In immediate trading, gold rose by 0.3 percent to reach USD2,389.38 per ounce by 1014 GMT, nearing the all-time high of USD2,431.29 achieved just days prior on Friday. Meanwhile, US gold futures experienced a slight dip of 0.1 percent, settling at USD2,405.10. The remarkable ascent in gold prices reflects the prevailing market sentiment characterized by heightened geopolitical risks and cautious optimism among investors.
Lukman Otunuga, senior research analyst at FXTM, highlighted the significant overbought conditions observed in the precious metal from a technical standpoint. He noted that while optimistic investors draw strength from market uncertainties fueled by geopolitical factors, concerns persist over the impact on data and monetary policy expectations. The prevailing uncertainty underscores the pivotal role of gold as a reliable asset in times of geopolitical instability and economic volatility.
The retreat in the dollar and ten-year Treasury bond yields from their recent highs provided additional support to gold prices. This dynamic rendered the yellow metal, priced in US currency, less attractive to holders of other currencies, further driving demand for gold as a hedge against currency depreciation and financial market turbulence.
Overall, the surge in gold prices reflects the complex interplay of geopolitical tensions, market uncertainties, and shifting monetary policy expectations. Against this backdrop, gold continues to assert its status as a preferred safe haven asset, offering investors a shield against the inherent risks and uncertainties prevailing in global financial markets.
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