Gold surpasses $2400 for first time ever
Gold prices rallied on Tuesday and scaled fresh record highs on strong haven demand, as global concerns mount.
Earlier US data showed industrial output rose 0.4% in March as expected, after falling 1.8% in the first quarter of the year.
US 10-year treasury yields rose by 4.5 basis points to 4.674%, after touching 4.696%, the highest since early November.
Two-year treasury yields rose by 2.5 basis points to 4.961%, while 30-year yields rose by 5 basis points to 4.788%.
San Francisco Fed President Mary Daly said there’s no urgent need to cut interest rates, warning from taking rash decisions.
Separately, the International Monetary Fund raised its global growth forecast by 0.1% to 3.2%, while expecting the US economy to grow by 2.7% this year.
The IMF expects the US to register an annual growth rate of 2.7%, up from 0.6% in latest forecasts.
Goldman Sachs’ analysts said in a recent memo that gold prices will likely reach $2700 by the end of 2024.
Otherwise, the dollar index rose 0.1% as of 19:50 GMT to 106.3, with a session-high at 106.5, and a low at 106.07.
Gold spot prices rose 1% to $22.9 an ounce as of 19:51 GMT to $2406.1 an ounce.
US stock indices edge lower, but Dow Jones ekes out gains
Most US stock indices lost ground on Tuesday with the exception of Dow Jones, amid a constant flux of corporate earnings results for the first quarter.
Earlier US data showed industrial output rose 0.4% in March as expected, after falling 1.8% in the first quarter of the year.
US 10-year treasury yields rose by 4.5 basis points to 4.674%, after touching 4.696%, the highest since early November.
Two-year treasury yields rose by 2.5 basis points to 4.961%, while 30-year yields rose by 5 basis points to 4.788%.
San Francisco Fed President Mary Daly said there’s no urgent need to cut interest rates, warning from taking rash decisions.
Separately, the International Monetary Fund raised its global growth forecast by 0.1% to 3.2%, while expecting the US economy to grow by 2.7% this year.
The IMF expects the US to register an annual growth rate of 2.7%, up from 0.6% in latest forecasts.
On trading, Dow Jones rose 0.1%, or 40 points as of 14:58 GMT to 37,775, while S&P 500 fell 0.3%, or 14 points to 5,047, as NASDAQ fell 0.2%, or 34 points to 15,850.
Oil prices hover near two-week lows as markets expect little response from Israel to Iran's attacks
Global oil prices fell in American trade on Tuesday, approaching two-week lows as the US now expects little response from Israel to the unprecedented Iranian attack on Israel soil.
Now traders await initial data on US crude stocks later today from the American Petroleum Institute, expected to show a buildup.
Prices
US crude prices fell 1% to $84.83 a barrel, with a session-high at $86.14, while Brent prices fell 1.05% to $89.56 a barrel, with a session-high at $90.80.
US crude rose 0.25% on Monday, while Brent rose 0.2%, away from two-week lows at $84.08 a barrel and $88.76 a barrel respectively.
Limited Israeli Response to Iran
Four US officials said to the NBC News network they expect the Israeli response to the Iranian attack to be limited, and will likely focus on striking Iranian surrogates outside Iran.
Israel’s war council convened on Monday to consider the response to Iran, which would be “imminent” according to military officials.
The Israeli Army’s leader Herzi Halevi thanks the US and Britain for helping strike down over 300 missiles and drones aimed at Israel.
Leaders of Britain, France, and Germany called Israel to avoid escalation following the Iranian attack, with US President Joe Biden asserting his country’s support for Israel, but asserted it won’t join a retaliation attempt against Iran.
US Stocks
The American Petroleum Institute will release initial data on US crude stocks later today, expected to show another buildup last week.
Analysis
RBC Capital Markets’ analysts believe the war will likely be contained if the Israeli government followed the advice of the US government and avoided an escalation.
The oil markets will remain on guard to monitor any such developments in the highly torn and war-driven region of the Middle East.
Will gold prices scale $3000 an ounce in 2024?
Gold prices continued to move in a positive zone and approached the record highs scaled last week above $2400 an ounce.
Prices are underpinned by mounting geopolitical tensions between Iran and Israel, driving demand on safe havens.
Gold closed on a fresh record high on Monday, while active June futures settled at $2383.
The City Bank group wrote a memo saying that gold’s recent surge is driven by geopolitical tensions, and coincides with record highs for the stock market as well.
Haven demand rallied after Iran launched over 300 drones and missiles directly towards Israel, with most intercepted mid-air.
Israel’s military officials asserted that Israel is preparing for a response to the attack launched by Tehran last week, while European and US officials called for restraint.
Analysts have warned that an Israeli response could lead to a wide-spread conflict, which will boost demand on gold prices and drive oil prices and the dollar higher.
$3000 an ounce
The City Bank group expects gold prices to hit $3000 in the next six to 18 months.
Gold is a favorite among investors in times of uncertainty and inflation, such as these times.
Gold spot prices hit a record high at $2431.55 an ounce on Friday, April 12.
Spot Prices
An usual phenomenon has now occurred, with US stock indices surging 15% this year at the same time that gold is hitting record highs as well.
Stocks are gaining ground amid high generosity from global central banks, which are starting to unwind their restrictive monetary policies.
Recent scorching US inflation data for March hurt the odds of a Federal Reserve interest rate cut in June or July, with investors now expecting only two interest rate cuts this year in the US, instead of three.
Higher interest rates mean higher treasury yields which usually sap demand from gold, however analysts remain optimistic on gold’s prospects for its haven status and strong actual demand.
Goldman Sachs’ Outlook
On Friday, Goldman Sachs’ analysts said that the gold market is an “unshakable bullish market”, revising their price target for the yellow metal from $2300 to $2700 by the end of the year.