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Gold Steadies Near Record High With Haven Demand Fueling Rally - BLOOMBERG
BY , Bloomberg News
, Bloomberg
(Bloomberg) -- Gold slipped from Friday’s record high, even as Iran’s strike on Israel added more impetus to a rally that’s seen it jump by a fifth since mid-February.
Bullion pared gains as attention turned to a potential counter-strike that risks starting a full-blown war between the two Middle Eastern powers. Israeli military officials reasserted they have no choice but to respond, while the US and Europe urged restraint.
Wall Street’s so-called ‘Fear Gauge’ — the Chicago Board Options Exchange Volatility Index — has shot up by more than a quarter over Friday and Monday to the highest since late October, several weeks after the initial Hamas attack on Israel.
The nervousness is adding more fuel to a rally in gold that’s happened even as expectations for when the Federal Reserve will pivot to rate cuts have been pushed back. The precious metal has instead been underpinned by other long-standing supports — including robust buying by central banks, increased demand from Chinese consumers and the rising geopolitical risks.
There’s growing evidence of a breakdown in the traditional inverse relationship between bullion and US real rates. This phenomenon was on display on Monday, as gold shrugged off a move higher in Treasury yields, which would typically be a headwind.
Citigroup Inc. raised its 2024 gold estimate to $2,350 an ounce and made a “massive 40% upward revision” to its 2025 forecast to $2,875, it said in a note. That came after Goldman Sachs Group Inc. said Friday the metal was in an “unshakable bull market,” raising its year-end prediction to $2,700.
Spot gold fell 0.6% to $2,369.92 an ounce as of 9:56 a.m. in London, not that far off an all-time high of $2,431.52 reached on Friday. The Bloomberg Dollar Spot Index added 0.2%, following a 1.3% gain last week that was the most since 2022. Silver, platinum and palladium all declined.
