Gold prices edged up on Monday, hovering below a record high hit in the previous session, as escalating tensions in the Middle East lifted bullion’s safe-haven appeal.
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Gold prices took a breather on Monday after hitting an all-time high in the previous session.
Spot gold was up 0.2% at $2,348.28 per ounce. Prices hit a record high of $2,431.29 on Friday in anticipation of Iran’s retaliatory attack. U.S. gold futures lost 0.4% at $2,364.4.
Iran launched explosive drones and missiles at Israel late on Saturday in retaliation for a suspected Israeli attack on its consulate in Syria on April 1.
“The market had already priced in this well-flagged event last week, allowing it to consolidate after a very strong run-up,” said Ole Hansen, head of commodity strategy at Saxo Bank.
“The appetite for gold has been extremely strong in recent weeks and now with that we have a small setback, that could potentially attract some fresh buying after the correction, as underlying concerns about geopolitics remain.”
Bullion has gained nearly 14% so far this year, ignoring traditional headwinds such as a higher dollar and strong economic data out of the United States.
Despite recent U.S. economic data showing strong labor market and high inflation, Federal Reserve Bank of Boston President Susan Collins is eyeing a couple of interest rate cuts this year.
Lower interest rates reduce the opportunity cost of holding bullion.