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HomeFinance NewsGold prices near $2,400 as M.East tensions drive safe haven demand -Investing.com

Gold prices near $2,400 as M.East tensions drive safe haven demand -Investing.com

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Gold prices in Asia continued to rise, nearing record highs due to increased safe haven demand amid escalating geopolitical tensions between Iran and Israel. Despite the spike, limited gains were seen in the yellow metal as the anticipation of higher U.S. interest rates led to a rise in Treasury yields. However, gold still maintained impressive gains over the last two weeks, primarily supported by the heightened safe haven demand.

The surge in gold prices was largely fueled by rising geopolitical tensions in the Middle East, specifically after Iran initiated an attack on Israel over the weekend. The possibility of a full-scale war between the two nations, which could potentially involve other regional and global powers, heightened concerns and boosted demand for gold as a traditional safe haven asset. Alongside geopolitical factors, central bank buying in emerging markets also contributed to gold’s support, especially amid growing fears of a global economic downturn in 2024.

As investors awaited a speech from Federal Reserve Chair Powell for clues on potential interest rate adjustments, the outlook for gold remained uncertain. The recent strong inflation and retail sales data shifted expectations for an interest rate cut in June, leading traders to hedge against potentially higher U.S. interest rates by purchasing dollars. Despite some limitations in gold’s upside, other precious metals showed mixed movement on Tuesday, with copper prices dipping slightly from 22-month highs based on mixed data from China, the world’s largest copper importer.

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