Gold Hits All-Time High: What Happens Next? A Look At Impact Of Past Geopolitical Events
Technically, gold is seeing support at around $3,220 and $3,145 and a correction seems likely, said an analyst.
As fresh geopolitical tensions erupted on Friday following an escalation between Israel and Iran, gold prices have crossed Rs 1 lakh per 10 gram (24-karat) mark again, reaching an all-time high. Gold price surged to Rs 1,00,350 per 10 gram in India on Friday, according to the Indian Bullion Association.
Spot gold price advanced 0.9% to $3,383.22 an ounce on June 12, reaching its highest level in a week since June 5, amid the escalating tension between Iran and Israel, according to a Reuters report.
The yellow metal, considered a safe haven asset during uncertain periods, touched the Rs 1 lakh mark for the first time in April.
Since then, the market cooled somewhat, experiencing minor dips as the uncertainties triggered by US tariffs and geopolitical tensions began to ease. However, after Israel launched strikes on Iran on Friday, the yellow metal is in the spotlight again.
In Delhi, gold is selling for Rs 10,155 per gram (24-karat), recording an over Rs 200 jump in a single day. Meanwhile, the price of 22-karat gold is Rs 9,310 per gram in the national capital. In Mumbai, 24-karat gold is priced at Rs 10,140 per gram, while 22-karat gold is available at Rs 9,295 per gram.
When gold hit its all-time high of $3,500 per ounce on April 22, it was prompted by escalating tensions between the US and China, the Russia-Ukraine war, and other global factors. Now, a similar geopolitical situation seems to be unfolding between Iran and Israel.
At the end of April, market experts had predicted that the Rs 1 lakh is a “cautious” level for gold, particularly because of the sharp increase seen only within just a few months.
"Whenever we see the one lakh mark, people become cautious. Gold's volatility is high, and it struggles to sustain above that level. Technically, we’re seeing support at around $3,220 and $3,145. A correction seems likely,” Tejas Shigrekar, a Senior Technical Analyst of Commodity and Currency at Angel One, had told NDTV Profit, advising to monitor international events.
Now with Israel’s attack and Iran’s subsequent retaliation, Carsten Menke, an analyst at Julius Baer, told Reuters on Friday that further escalation is likely to “add to the bullish mood in the gold market.”
“With the situation being highly in flux, it is too early to tell whether this shock will lastingly lift prices," Menke said.
Following Israel’s strikes, Iran has retaliated by launching 100 drones towards Israeli territory. Earlier, Israeli Prime Minister Benjamin Netanyahu had defended the strikes against Iran’s nuclear facilities and said that this was the start of a prolonged operation to prevent Tehran from building an atomic weapon.
While the US has said that it is not involved in the latest escalation, further escalation between Israel and Iran could prompt international intervention, leading to the potential spread of the conflict.
In that case, gold could show a more lasting reaction, according to Menke.
"Should there be disruptions to oil supplies…either directly due to attacks or indirectly due to politically imposed measures….or should the conflict spread in the region, then gold could show a more lasting reaction,” he suggested.
