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Gold futures edged higher Monday to notch another record-high settlement in safe-haven trading sparked by Middle East tensions, overcoming earlier losses as U.S. Treasury yields and the dollar rose following a stronger than expected increase in U.S. retail sales in March.
Monday's gold price move looks geopolitically driven, likely related to statements from Israel that it will respond to Iran's weekend drones and missile attack that has stoked fears of a broader regional conflict, TD Securities head of commodity strategies Bart Melek said.
Middle East tensions have raised concerns of stability, which means geopolitical risks likely will remain at the forefront of markets this week, ANZ Research says.
The yellow metal also has gained support from other factors, including strong buying by central banks and increased demand from Chinese consumers.
Some Wall Street banks have raised their price forecasts for gold, including Goldman Sachs, which lifted its year-end forecast to $2,700/oz, helped by interest rate cuts expected later this year from the U.S. Federal Reserve.
Meanwhile, the dollar rose 0.2% and 10-year Treasury yields hit a five-month high after data showed U.S. retail sales increased more than expected in March.
Front-month Comex gold (XAUUSD:CUR) for April delivery ended +0.4% to $2365.80/oz, a new record high settlement, and front-month April Comex silver (XAGUSD:CUR) rose for the 13th straight session, +1.4% to $28.651/oz, its best settlement value since February 1, 2021.
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"For political reasons, Iran likely needed to be public in their response because an attack on an embassy is like an attack on their own soil, but they were careful to say that it was limited to that attack," says Edmund Moy, strategist for precious metals' distributor U.S. Money Reserve, adding that Iran now is expected to use surrogates like they have in the past while Israel will press for more aid from the U.S.