Gold stabilizes following record-breaking highs amid escalating tensions in the Middle East

As geopolitical uncertainties intensified, investors turned to gold as a refuge, driving its prices higher.

Gold prices were rising on Monday after reaching a historic high in the previous session, as investors sought safe-haven assets amid escalating conflict in the Middle East.

At 1120 GMT, spot gold was up 0.67% at $2,359.93 per ounce, after hitting a record high of $2,431.29 on Friday, ahead of Iran's anticipated retaliatory strike. U.S. gold futures gained 0.13% to $2,377.50.

Iran launched explosive drones and missiles against Israel late on Saturday in retaliation for an alleged Israeli attack on its consulate in Syria on April 1st.

So far this year, bullion has gained nearly 14%, disregarding traditional headwinds like the rise of the dollar and robust economic data from the United States.

Despite recent U.S. economic data showing a strong job market and high inflation, Boston Federal Reserve Bank President Susan Collins anticipates a couple of interest rate cuts this year. Lower rates reduce the opportunity cost of holding bullion, which does not earn interest.

" The market already discounted this event last week, allowing it to consolidate after a strong rally," commented Ole Hansen of Saxo Bank. "The appetite for gold has been very strong in recent weeks and now we have a small decline that could attract new purchases after the correction, as underlying concerns about geopolitics persist."

So far this year, bullion has gained nearly 14%, disregarding traditional headwinds like the rise of the dollar and robust economic data from the United States.

Although the latest U.S. economic data showed a strong job market and high inflation, Boston Federal Reserve Bank President Susan Collins forecasts a couple of interest rate cuts this year. Lower rates reduce the opportunity cost of holding bullion, which does not earn interest.

Spot silver was up 1.7%, at $28.34 per ounce, after hitting its highest level since early 2021 on Friday. On the other hand, platinum was down 0.6%, at $970.15, while palladium was down 0.8%, at $1,040.68.