Gold traded firmly on Monday, nearing record highs as demand for safe-haven assets increased amid escalating tensions between Iran and Israel, though gains were capped by a strong U.S. dollar.
Spot gold (XAU/USD) was trading at $2,355.38 an ounce by 06:40 GMT, after hitting a record high of $2,430 last week. The precious metal’s strength stemmed from Iran’s drone and missile strike against Israeli territory over the weekend, supposedly in retaliation for an attack on an Iranian embassy in Syria.
While the Iranian attack caused limited damage in Israel, it raised concerns over a potential broader Middle East conflict involving the U.S. However, Tehran stated the strike concluded its offensive against Israel, and Israeli ministers reportedly had no immediate retaliation plans, capping some safe-haven flows.
The U.S. also appeared focused on de-escalating tensions, stating it would not engage in retaliatory action against Iran. This stance, coupled with the dollar’s strength, restricted gold’s upside.
Despite tailwinds, gold’s outlook remained clouded by prospects of higher U.S. interest rates following recent elevated inflation readings, which could dent the non-yielding asset’s appeal.
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