Gold concluded last week’s trading at $3,433 per ounce, posting weekly gains exceeding 3%, driven by heightened demand for safe-haven assets as tensions escalated in the Middle East.

Market Dynamics and Price Movements

A specialized report by Kuwait’s Dar Al Sabaek (The Bullion House) noted on Sunday that spot gold prices surged during trading to levels above $3,440/oz before retreating slightly due to profit-taking. Investors remain cautious amid evolving geopolitical developments and anticipated monetary policy decisions from major central banks.

Despite the military escalation between Israel and Iran, global financial markets showed relative resilience. However, rising uncertainty—particularly around US monetary policy—supported gold’s upward momentum.

Economic Data and Fed Rate Cut Expectations

Recent weak US economic data reinforced expectations of interest rate cuts in the second half of 2024. Both the Consumer Price Index (CPI) and Producer Price Index (PPI) for May indicated slowing inflation, while the University of Michigan’s Consumer Sentiment Index reflected improved household confidence amid lower inflation expectations.

However, the 10-year US Treasury yield rose to 4.36%, which could pressure gold prices if yields continue climbing. Meanwhile, the US dollar index fell to a three-year low below 98 points before rebounding by 0.30%, further boosting gold’s appeal for global investors.

Geopolitical and Policy Uncertainties

The report highlighted volatility in the global economy, fueled by political tensions and ambiguity around US trade policies, including renewed threats from former President Donald Trump to impose unilateral tariffs to strengthen Washington’s negotiating position.

While geopolitically driven rallies may be vulnerable to sudden reversals if tensions ease, eroding confidence in US policies and uncertainty over the Federal Reserve’s direction continue to support gold’s role as a safe-haven asset and store of value.

Bullish Bank Forecasts

Major investment banks remain optimistic:

• Goldman Sachs projects gold could reach $3,700/oz by end-2025.

• Bank of America forecasts $4,000/oz within 12 months.

Central Bank Watch

Several central banks worldwide are set to announce interest rate decisions this week, likely increasing market volatility and directly impacting gold prices.

Local Market Update (Kuwait)

• 24K gold: 33.98 KD/gram

• 22K gold: 31.15 KD/gram

• Silver: 410 KD/kg (~$1,340)

Unit Clarification

An ounce (or "troy ounce"), used for precious metals, equals 31.103 grams, whereas the standard ounce measures 28.349 grams.