Gold prices rose on Monday to their highest level in 7 years, and the price of an ounce of palladium reached a record level of more than $2000 as investors turned to the protection offered by the yellow metal, amid escalating geopolitical tensions between the United States and Iran.
In the spot market, the price of gold rose to $1,579.72 per ounce, the highest level since April 2013. As the price of palladium reached a record level of $ 2020.18 an ounce, silver and platinum prices also rose.
“Political geography is at the forefront,” says Benjamin Lu, analyst at Philip Futures. “The escalation of tension between Iran and the United States has led to a rise in the price of gold,” the analyst added.
President Donald Trump threatened to impose severe sanctions on Iraq on Sunday, after the Iraqi parliament called on US forces to leave its territory. Likewise, the American President once again threatened Tehran with “severe retaliation” in the event of an Iranian attack on American facilities in the Middle East, in response to the elimination of General Qassem Soleimani.
In response, Iran announced on Sunday a further reduction of the commitments made by the international nuclear agreement concluded in 2015, also renouncing the last restriction of this agreement, which was still in compliance, namely the limitation of the number of centrifuges.
The risk aversion in financial markets lies behind the high price of gold, which is considered a safe investment in times of political and financial uncertainty. “If gold crosses the resistance level at $1585 an ounce, it will reach a new psychological level at $1,600,” Benjamin Lu said.
But there are other factors behind the growth in the price of gold. Analysts believe that the US Federal Reserve is unlikely to increase the benchmark interest rate over the next six months, which will continue to put pressure on the US dollar, both of which are positive for gold.