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Gold prices decline after touching the $2,400 per ounce threshold
The spot price of gold fell 0.4% to $2,363.16 per ounce
Gold prices fell after touching a record high, as rising tensions in the Middle East intensified the momentum for buying safe haven assets.
Gold broke the $2,400 per ounce level for the first time early Friday, rising as much as 2.5% to $2,431.52, before erasing its gains to fall by as much as 0.6%.
The yellow metal is up 15% so far this year, surpassing the 13% advance recorded throughout last year.
The precious metal's rise and often huge moves have left some onlookers scratching their heads, due to the lack of any clear catalysts, especially as expectations for interest rate cuts by the Federal Reserve have become murkier in recent weeks.
Rising tensions in the Middle East and Ukraine and ongoing problems in the Chinese economy increase the appeal of bullion as a safe haven. Meanwhile, some investors were seeking safety on bets that inflation could remain high over the long term, supporting gold's rise. Central bank buying, led by China, has added some upward momentum.
Israel is preparing for an unprecedented direct attack by Iran on government targets on Saturday, according to people familiar with Western intelligence assessments, a move that would threaten an all-out regional war.
Continued strong buying from China has also supported prices, with the premium rising in Shanghai, according to Nicky Shiels, head of metals strategy at Geneva-based MKS Pampa. “The markets became a little disorganized as the convexity set in, and trading started from big number to big number,” she said.
Traders are buying gold call options around $2,500 and $3,000, to chase the rally, further supporting prices.
