At around 7:00 a.m. on June 13 (Vietnam time), the world gold price surpassed the threshold of 3,400 USD/ounce in the Asian trading session, reaching the highest level in more than 5 months, up to 3,425 USD.
The main reason for this increase comes from increased geopolitical tensions in the Middle East and new expectations that the US Federal Reserve (Fed) will soon cut interest rates.
The situation escalated after Israeli Defense Minister Israel Katz announced that he had launched a "primacy attack" against Iran and declared a state of emergency to prepare for retaliatory actions.
Israeli Prime Minister Benjamin Netanyahu said the campaign's goal is to eliminate the nuclear threat from Iran, because if it fails, other countries in the region could race to own nuclear weapons. Mr. Netanyahu emphasized that the campaign will last until the target is achieved.
This development has caused investors to rush to gold as a safe haven. Gold has risen for the second consecutive day due to growing geopolitical risks, according to Peter Grant, vice president and senior metals strategist at Zanier Metals. He said that if gold continues to surpass the $3,400 threshold, small barriers at $3,417 and $3,431 could be broken, paving the way for a new record high.
At the same time, the US Producer Price Index (PPI) data released lower than expected has increased the possibility of the Fed cutting interest rates soon. This weakens the US dollar and supports the prices of commodities priced in this currency, including gold.
Traders now expect the Fed to cut interest rates by 25 basis points in September, and are likely to continue a second cut in October. Before the PPI data was released, many investors still thought that the Fed would wait until December to make a second move.
The combination of geopolitical risks and loose monetary policy expectations is creating conditions for gold to continue to increase. In the context of many uncertainties, gold is considered a top "shelter" for global investors.
